Truthful Revelation Mechanisms for Simultaneous Common Agency Games
AbstractIn games in which multiple principals contract simultaneously and non-cooperatively with the same agent, standard direct revelation mechanisms in which the agent reports his type(i.e. his exogenous private information) have been proven inadequate to characterize the entire set of equilibrium outcomes. This paper introduces a more general class of revelation mechanisms in which the agent reports also the contractual decisions he is inducing with the principals. We rst show that such a class has the same nice properties as the class of all unrestricted menus: (i) for any equilibrium of any indirect game with arbitrary communication space for the principals, there exists a truthful equilibrium in the game in which the principals are restricted to o¤er revelation mechanisms that sustains the same outcomes; (ii) any truthful equilibrium is robust in the sense that it remains an equilibrium in any game in which the principalsstrategy space is enlarged. We next show how revelation mechanisms can be put to work in applications such as menu auctions, moral hazard settings, and competition in non-linear tariffs to identify necessary and sufficient conditions for the sustainability of outcomes as common agency equilibria.
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Bibliographic InfoPaper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1458.
Date of creation: Jul 2007
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Other versions of this item:
- Alessandro Pavan & Giacomo Calzolari, 2010. "Truthful Revelation Mechanisms for Simultaneous Common Agency Games," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 132-90, May.
- Alessandro Pavan & Giacomo Calzolari, 2008. "Truthful Revelation Mechanisms for Simultaneous Common Agency Games," Carlo Alberto Notebooks 85, Collegio Carlo Alberto.
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-25 (All new papers)
- NEP-CTA-2008-03-25 (Contract Theory & Applications)
- NEP-GTH-2008-03-25 (Game Theory)
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