IDEAS home Printed from https://ideas.repec.org/p/tky/fseres/2006cf401.html
   My bibliography  Save this paper

Role of Linking Mechanisms in Multitask Agency with Hidden Information

Author

Listed:
  • 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)

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.

Suggested Citation

  • Hitoshi Matsushima & Koichi Miyazaki & Nobuyuki Yagi, 2006. "Role of Linking Mechanisms in Multitask Agency with Hidden Information," CIRJE F-Series CIRJE-F-401, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2006cf401
    as

    Download full text from publisher

    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2006/2006cf401.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fehr, Ernst & Falk, Armin, 2002. "Psychological foundations of incentives," European Economic Review, Elsevier, vol. 46(4-5), pages 687-724, May.
    2. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications - Books, The World Bank Group, number 14902, December.
    3. Alessandra Casella & Thomas Palfrey & Raymond Riezman, 2013. "Minorities and Storable Votes," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 15, pages 247-282, World Scientific Publishing Co. Pte. Ltd..
    4. Dirk Engelmann & Veronika Grimm, 2012. "Mechanisms for Efficient Voting with Private Information about Preferences," Economic Journal, Royal Economic Society, vol. 122(563), pages 1010-1041, September.
    5. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    6. Matsushima, Hitoshi, 2001. "Multimarket Contact, Imperfect Monitoring, and Implicit Collusion," Journal of Economic Theory, Elsevier, vol. 98(1), pages 158-178, May.
    7. Matsushima, Hitoshi, 2007. "Mechanism design with side payments: Individual rationality and iterative dominance," Journal of Economic Theory, Elsevier, vol. 133(1), pages 1-30, March.
    8. Casella, Alessandra, 2005. "Storable votes," Games and Economic Behavior, Elsevier, vol. 51(2), pages 391-419, May.
    9. Casella, Alessandra & Gelman, Andrew & Palfrey, Thomas R., 2006. "An experimental study of storable votes," Games and Economic Behavior, Elsevier, vol. 57(1), pages 123-154, October.
    10. Matsushima, Hitoshi, 1991. "Incentive compatible mechanisms with full transferability," Journal of Economic Theory, Elsevier, vol. 54(1), pages 198-203, June.
    11. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
    12. Hanming Fang & Peter Norman, 2003. "An Efficiency Rationale for Bundling of Public Goods," Cowles Foundation Discussion Papers 1441, Cowles Foundation for Research in Economics, Yale University.
    13. Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, January.
    14. Fang, Hanming & Norman, Peter, 2005. "Overcoming Participation Constraints," Microeconomics.ca working papers norman-05-04-22-05-35-30, Vancouver School of Economics, revised 28 Apr 2005.
    15. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    16. Itoh Hideshi, 1993. "Coalitions, Incentives, and Risk Sharing," Journal of Economic Theory, Elsevier, vol. 60(2), pages 410-427, August.
    17. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence," Econometrica, Econometric Society, vol. 65(4), pages 833-860, July.
    18. Eliaz, Kfir & Ray, Debraj & Razin, Ronny, 2007. "Group decision-making in the shadow of disagreement," Journal of Economic Theory, Elsevier, vol. 132(1), pages 236-273, January.
    19. Dirk Engelmann & Veronika Grimm, 2006. "Overcoming Incentive Constraints? The (In-)effectiveness of Social Interaction," Working Paper Series in Economics 22, University of Cologne, Department of Economics.
    20. Mark Armstrong, 1999. "Price Discrimination by a Many-Product Firm," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 151-168.
    21. Johnson, Scott & Pratt, John W & Zeckhauser, Richard J, 1990. "Efficiency Despite Mutually Payoff-Relevant Private Information: The Finite Case," Econometrica, Econometric Society, vol. 58(4), pages 873-900, July.
    22. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
    23. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-361, March.
    24. Chung, Kim-Sau, 1999. "A Note on Matsushima's Regularity Condition," Journal of Economic Theory, Elsevier, vol. 87(2), pages 429-433, August.
    25. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-1257, November.
    26. Aoyagi, Masaki, 1998. "Correlated Types and Bayesian Incentive Compatible Mechanisms with Budget Balance," Journal of Economic Theory, Elsevier, vol. 79(1), pages 142-151, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David A. Miller & Kareen Rozen, 2011. "Optimally Empty Promises and Endogenous Supervision," Cowles Foundation Discussion Papers 1823, Cowles Foundation for Research in Economics, Yale University, revised Jun 2012.
    2. Renou, Ludovic & Tomala, Tristan, 2015. "Approximate implementation in Markovian environments," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 401-442.
    3. Hitoshi Matsushima, 2010. "Role Of Relative And Absolute Performance Evaluations In Intergroup Competition," The Japanese Economic Review, Japanese Economic Association, vol. 61(4), pages 443-454, December.
    4. Hitoshi Matsushiima, 2006. "Relative Performance Evaluation between Multitask Agents," CARF F-Series CARF-F-067, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    5. Xiao Lin & Ce Liu, 2022. "Credible Persuasion," Papers 2205.03495, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hitoshi Matsushima & Koichi Miyazaki & Nobuyuki Yagi, 2006. "Role of Linking Mechanisms in Multitask Agency with Hidden Information ( Revised as CARF-F-209(2010) )," CARF F-Series CARF-F-059, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Claude d'Aspremont & Jacques Crémer & Louis-André Gérard-Varet, 2003. "Correlation, independence, and Bayesian incentives," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(2), pages 281-310, October.
    3. d'Aspremont, Claude & Cremer, Jacques & Gerard-Varet, Louis-Andre, 2004. "Balanced Bayesian mechanisms," Journal of Economic Theory, Elsevier, vol. 115(2), pages 385-396, April.
    4. Matsushima, Hitoshi, 2007. "Mechanism design with side payments: Individual rationality and iterative dominance," Journal of Economic Theory, Elsevier, vol. 133(1), pages 1-30, March.
    5. Guo, Huiyi, 2019. "Mechanism design with ambiguous transfers: An analysis in finite dimensional naive type spaces," Journal of Economic Theory, Elsevier, vol. 183(C), pages 76-105.
    6. Kosenok, Grigory & Severinov, Sergei, 2008. "Individually rational, budget-balanced mechanisms and allocation of surplus," Journal of Economic Theory, Elsevier, vol. 140(1), pages 126-161, May.
    7. Miller, Nolan H. & Pratt, John W. & Zeckhauser, Richard J. & Johnson, Scott, 2007. "Mechanism design with multidimensional, continuous types and interdependent valuations," Journal of Economic Theory, Elsevier, vol. 136(1), pages 476-496, September.
    8. Johnson, Scott & Miller, Nolan & Pratt, John W. & Zeckhauser, Richard, 2003. "Efficient Design with Multidimensional, Continuous Types, and Interdependent Valuations," Working Paper Series rwp03-020, Harvard University, John F. Kennedy School of Government.
    9. Goeree, Jacob K. & Zhang, Jingjing, 2017. "One man, one bid," Games and Economic Behavior, Elsevier, vol. 101(C), pages 151-171.
    10. Pintér, Ágnes & Veszteg, Róbert F., 2010. "Minority vs. majority: An experimental study of standardized bids," European Journal of Political Economy, Elsevier, vol. 26(1), pages 36-50, March.
    11. Casella, Alessandra & Turban, Sébastien, 2014. "Democracy undone. Systematic minority advantage in competitive vote markets," Games and Economic Behavior, Elsevier, vol. 88(C), pages 47-70.
    12. Hortala-Vallve, Rafael & Llorente-Saguer, Aniol, 2010. "A simple mechanism for resolving conflict," Games and Economic Behavior, Elsevier, vol. 70(2), pages 375-391, November.
    13. Kwiek, Maksymilian & Marreiros, Helia & Vlassopoulos, Michael, 2016. "An experimental study of voting with costly delay," Economics Letters, Elsevier, vol. 140(C), pages 23-26.
    14. Hitoshi Matsushima, 2005. "Mechanism Design with Side Payments: Individual Rationality and Iterative Dominance ( Published in "Journal of Economic Theory" (as a regular article). )," CARF F-Series CARF-F-050, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    15. Rafael Hortala-Vallve & Aniol Llorente-Saguer & Rosemarie Nagel, 2013. "The role of information in different bargaining protocols," Experimental Economics, Springer;Economic Science Association, vol. 16(1), pages 88-113, March.
    16. Felix J. Bierbrauer & Martin F. Hellwig, 2015. "Public-Good Provision in Large Economies," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_12, Max Planck Institute for Research on Collective Goods.
    17. Urs Fischbacher & Simeon Schudy, 2014. "Reciprocity and resistance to comprehensive reform," Public Choice, Springer, vol. 160(3), pages 411-428, September.
    18. Martin Hellwig & Felix Bierbrauer, 2009. "Public Good Provision in a Large Economy," 2009 Meeting Papers 1062, Society for Economic Dynamics.
    19. Grüner, Hans Peter & Koriyama, Yukio, 2012. "Public goods, participation constraints, and democracy: A possibility theorem," Games and Economic Behavior, Elsevier, vol. 75(1), pages 152-167.
    20. Sergei Severinov & Grigory Kosenok, 2004. "Individually Rational, Balanced-Budget Bayesian Mechanisms and the," 2004 Meeting Papers 633, Society for Economic Dynamics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2006cf401. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CIRJE administrative office (email available below). General contact details of provider: https://edirc.repec.org/data/ritokjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.