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Competing Mechanisms in Games Played Through Agents: Theory and Experiment

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  • Seungjin Han
  • Andrew Leal

Abstract

This paper proposes Competing Mechanism Games Played Through Agent (CMGPTA), an extension of the GPTA (Prat and Rustichini (2003)), where a Principal can offer any arbitrary mechanism that specifies a transfer schedule for each agent conditional on all Agents' messages. We identify the set of equilibrium allocations using deviator-reporting mechanisms (DRMs) on the path and single transfer schedules off the path. We design a lab experiment implementing DRMs. We observe that implemented outcomes are efficient more often than random. A majority of the time, Agents do tell the truth on the identity of a deviating Principal, despite potential gains from (tacit) collusion on false reports. As play progresses, Agents learn to play with their counterparty Agent with the average predicted probability of collusion on false reports across groups increasing from about 9% at the beginning of the experiment to just under 20% by the end. However, group heterogeneity is significant.

Suggested Citation

  • Seungjin Han & Andrew Leal, 2024. "Competing Mechanisms in Games Played Through Agents: Theory and Experiment," Papers 2403.03317, arXiv.org, revised Jun 2025.
    • Handle: RePEc:arx:papers:2403.03317
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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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