Private Enforcement against Collusion in Mechanism Design
AbstractThis paper brings a new point of view into the theory of collusion-proof mechanism design, which highlights the principle of divide and conquer. We relax the restriction of publicly enforced grand contract in the framework of Laffont-Martimort-Itoh, which allows us to incorporate the approach of private enforcement into the theory. In a setting of moral hazard with mutually observable actions, we develop a multi-stage mechanism integrated with secret reporting and private transferring and show that the first-best allocation can be implememted in spite of collusion, which implies that preventing collusion entails no cost under new approach.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 873.
Date of creation: May 2006
Date of revision:
secret report; private enforcement; collusion-proof mechanism design;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Chen, Zhijun, 2006. "Fighting Collusion in Tournaments," MPRA Paper 872, University Library of Munich, Germany.
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