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Information Revelation in Competing Mechanism Games

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Abstract

We consider multiple-principal multiple-agent games of incomplete information. In this context, we identify a class of direct and incentive compatible mechanisms: each principal privately recommends to each agent to reveal her private information to the other principals, and each agent behaves truthfully. We show that there is a rationale in restricting attention to this class of mechanisms: if all principals make use of direct incentive compatible mechanisms, there are no incentives to unilaterally deviate towards more sophisticated mechanisms. We develop two examples to show that private recommendations are a key element of our construction, and that the restriction to direct incentive compatible mechanisms is not sufficient to provide a complete characterization of equilibria.

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Bibliographic Info

Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 205.

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Length: 22 pages
Date of creation: 04 Jul 2011
Date of revision: 04 Jul 2011
Handle: RePEc:rtv:ceisrp:205

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web page: http://www.ceistorvergata.it
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

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Keywords: Incomplete information; competing mechanisms; information revelation;

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References

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  1. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-40, July.
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  16. Andrea Attar & Eloisa Campioni & Gwenaël Piaser & Uday Rajan, 2007. "On multiple-principal multiple-agent models of moral hazard," LSF Research Working Paper Series 07-01, Luxembourg School of Finance, University of Luxembourg.
  17. Fahad Khalil & David Martimort & Bruno Maria Parigi, 2005. "Monitoring a Common Agent: Implications for Financial Contracting," CESifo Working Paper Series 1514, CESifo Group Munich.
  18. Andrea Attar & Thomas Mariotti & Francois Salanie, 2009. "Non-Exclusive Competition in the Market for Lemons," LERNA Working Papers 09.13.289, LERNA, University of Toulouse.
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Cited by:
  1. Andrea Attar & Eloisa Campioni & Gwenael Piaser & Uday Rajan, 2011. "Competing Mechanism Games of Moral Hazard: Communication and Robustness," CEIS Research Paper 196, Tor Vergata University, CEIS, revised 10 Jun 2011.

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