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Representing equilibrium aggregates in aggregate games with applications to common agency

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  • Martimort, David
  • Stole, Lars

Abstract

An aggregate game is a normal-form game with the property that each playerʼs payoff is a function of only his own strategy and an aggregate of the strategy profile of all players. Such games possess properties that can often yield simple characterizations of equilibrium aggregates without requiring that one solves for the equilibrium strategy profile. When payoffs have a quasi-linear structure and a degree of symmetry, we construct a self-generating maximization program over the space of aggregates with the property that the solution set corresponds to the set of equilibrium aggregates of the original n-player game. We illustrate the value of this approach in common-agency games where the playersʼ strategy space is an infinite-dimensional space of nonlinear contracts. We derive equilibrium existence and characterization theorems for both the adverse selection and moral hazard versions of these games.

Suggested Citation

  • Martimort, David & Stole, Lars, 2012. "Representing equilibrium aggregates in aggregate games with applications to common agency," Games and Economic Behavior, Elsevier, vol. 76(2), pages 753-772.
  • Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:753-772
    DOI: 10.1016/j.geb.2012.08.005
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    Citations

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    Cited by:

    1. Martimort, David & Semenov, Aggey & Stole, Lars, 2017. "A Complete Characterization of Equilibria in a Common Agency Screening Game," MPRA Paper 80870, University Library of Munich, Germany.
    2. Toumasatos, Evangelos & Steinshamn, Stein Ivar, 2017. "Coalition Formation with Externalities: The Case of the Northeast Atlantic Mackerel Fishery in a Pre and Post Brexit Context," Discussion Papers 2017/11, Norwegian School of Economics, Department of Business and Management Science.
    3. Martimort, David & Stole, Lars, 2015. "Menu Auctions and Influence Games with Private Information," MPRA Paper 62388, University Library of Munich, Germany.
    4. Zubrickas, Robertas, 2014. "The provision point mechanism with refund bonuses," Journal of Public Economics, Elsevier, vol. 120(C), pages 231-234.
    5. David Martimort & Aggey Semenov & Lars Stole, 2016. "A Complete Characterization of Equilibria in Common Agency Screening Games," Working Papers 1618E, University of Ottawa, Department of Economics.
    6. repec:the:publsh:2266 is not listed on IDEAS
    7. Martimort, David & Semenov, Aggey & Stole, Lars, 2015. "A Complete Characterization of Equilibria in Two-type Common Agency Screening Games," MPRA Paper 66620, University Library of Munich, Germany.

    More about this item

    Keywords

    Aggregate games; Common agency games; Supply-function games;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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