Role of Linking Mechanisms in Multitask Agency with Hidden Information

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Role of Linking Mechanisms in Multitask Agency with Hidden Information

Author Info

Hitoshi Matsushima (Faculty of Economics, University of Tokyo)
Koichi Miyazaki (Department of Economics, Pennsylvania State University)
Nobuyuki Yagi (Graduate School of Economics, University of Tokyo)

Additional information is available for the following registered author(s):

Hitoshi Matsushima

Abstract

We investigate the adverse selection problem where a principal delegates multiple tasks to individuals. The individuals form a group as a single agent and share their private signals in order to maximize their average payoff. We characterize the virtually implementable social choice functions by using the linking mechanism proposed by Jackson and Sonnenschein (2005) that restricts the message spaces. The principal does not require any incentive wage schemes and can therefore avoid any information rent and welfare loss due to risk aversion. We show the resemblance between the functioning of this message space restriction and that of incentive wage schemes.

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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-401.

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Length: 37pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:tky:fseres:2006cf401

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This paper has been announced in the following NEP Reports:

NEP-ALL-2006-03-11 (All new papers)
NEP-MIC-2006-03-11 (Microeconomics)

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Hitoshi Matsushiima, 2006. "Relative Performance Evaluation between Multitask Agents," CIRJE F-Series CIRJE-F-419, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]

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