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Endogenous Games and Mechanisms: Side Payments Among Players

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Author Info
Matthew O. Jackson (California Institute of Technology)
Simon Wilkie (California Institute of Technology)

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Abstract

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of examples, including voluntary contribution public good games, Cournot and Bertrand oligopoly, principal-agent problems, and commons games, among others.

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Paper provided by EconWPA in its series Microeconomics with number 0211008.

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Date of creation: 04 Nov 2002
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Handle: RePEc:wpa:wuwpmi:0211008

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Related research
Keywords: game theory; mechanism design; contracts; side payments; endogenous games; public goods;

Other versions of this item:

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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References listed on IDEAS
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  4. Ilya Segal, 1999. "Contracting With Externalities," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 337-388, May. [Downloadable!] (restricted)
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  7. Hal R. Varian, 1994. "Sequential Provision of Public Goods," Public Economics 9401003, EconWPA. [Downloadable!]
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  8. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November. [Downloadable!] (restricted)
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  13. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February. [Downloadable!] (restricted)
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  17. Lagunoff, Roger, 1992. "Fully Endogenous Mechanism Selection on Finite Outcome Sets," Economic Theory, Springer, vol. 2(4), pages 465-80, October.
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  20. repec:att:wimass:19199918 is not listed on IDEAS
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  22. Matthew O. Jackson, 2001. "A crash course in implementation theory," Social Choice and Welfare, Springer, vol. 18(4), pages 655-708. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Richard B. Freeman, 2006. "Searching for the EU Social Dialogue Model," NBER Working Papers 12306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Guillaume Haeringer & Sophie Bade & Ludovic Renou, 2006. "Bilateral Commitment," Working Papers 2006.75, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  3. Levent Kockesen & Emanuele Gerratana, 2009. "Strategic Effects of Incomplete and Renegotiation-Proof Contracts," TÜSİAD-Koç University Economic Research Forum Working Papers 0908, TUSIAD-Koc University Economic Research Forum. [Downloadable!]
  4. V. Bhaskar, 2004. "Games Played in a Contracting Environment," Economics Discussion Papers 583, University of Essex, Department of Economics. [Downloadable!]
  5. Brusset, Xavier, 2009. "Choosing a transport contract over multiple periods," MPRA Paper 18392, University Library of Munich, Germany, revised 09 Jan 2009. [Downloadable!]
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