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The Principal-Agent Matching Market

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Abstract

We propose a model based on competitive markets in order to analyse an economy with several principals and agents. We model the principal-agent economy as a two-sided matching game and characterise the set of stable outcomes of this principal-agent matching market. A simple mechanism to implement the set of stable outcomes is proposed. Finally, we put forward examples of principal-agent economies where the results fit.

Suggested Citation

  • Kaniska Dam, 2003. "The Principal-Agent Matching Market," CESifo Working Paper Series 945, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_945
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    References listed on IDEAS

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    8. Tayfun Sönmez & Tarik Kara, 1997. "Implementation of college admission rules (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(2), pages 197-218.
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    10. Besanko, David & Thakor, Anjan V, 1987. "Collateral and Rationing: Sorting Equilibria in Monopolistic and Competitive Credit Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 671-689, October.
    11. Serfes, Konstantinos, 2005. "Risk sharing vs. incentives: Contract design under two-sided heterogeneity," Economics Letters, Elsevier, vol. 88(3), pages 343-349, September.
    12. Alcalde, Jose & Perez-Castrillo, David & Romero-Medina, Antonio, 1998. "Hiring Procedures to Implement Stable Allocations," Journal of Economic Theory, Elsevier, vol. 82(2), pages 469-480, October.
    13. Kamecke, U, 1989. "Non-cooperative Matching Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 18(4), pages 423-431.
    14. Basu, Kaushik, 1992. "Limited liability and the existence of share tenancy," Journal of Development Economics, Elsevier, vol. 38(1), pages 203-220, January.
    15. Roberto Perotti, 1996. "Redistribution and Non-Consumption Smoothing in an Open Economy," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 411-433.
    16. Legros, Patrick & Newman, Andrew, 2002. "Assortative Matching in a Non-transferable World," CEPR Discussion Papers 3469, C.E.P.R. Discussion Papers.
    17. de Mesa, David & Webb, David C., 1992. "Efficient credit rationing," European Economic Review, Elsevier, vol. 36(6), pages 1277-1290, August.
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    Cited by:

    1. Han, Seungjin, 2015. "Robust competitive auctions," Economics Letters, Elsevier, vol. 136(C), pages 207-210.
    2. Guo, Chiquan & Wang, Yong J. & Metcalf, Ashley, 2014. "How to calibrate conventional market-oriented organizational culture in 21st century production-centered firms? A customer relationship perspective," International Journal of Production Economics, Elsevier, vol. 156(C), pages 235-245.
    3. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, pages 616-636.
    4. Kaniska Dam & David Pérez-Castrillo, 2003. "Equilibrium Limited Liability Contracts in a Landlord-Tenant Market," Working Papers 99, Barcelona Graduate School of Economics.
    5. Macho-Stadler, Inés & Pérez-Castrillo, David & Porteiro, Nicolás, 2014. "Coexistence of long-term and short-term contracts," Games and Economic Behavior, Elsevier, vol. 86(C), pages 145-164.
    6. Kaniska Dam, 2009. "Job Matching, Competition and Managerial Incentives," Working papers DTE 460, CIDE, División de Economía.
    7. Han Seungjin, 2016. "Sellers’ Implicit Collusion in Directed Search Markets," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(2), pages 711-738, June.
    8. Ghatak, Maitreesh & Karaivanov, Alexander, 2011. "Contractual Structure and Endogenous Matching in Partnerships," CEPR Discussion Papers 8298, C.E.P.R. Discussion Papers.
    9. Ulf von Lilienfeld-Toal & Dilip Mookherjee, 2010. "The Political Economy of Debt Bondage," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 44-84, August.
    10. Ghatak, Maitreesh & Karaivanov, Alexander, 2014. "Contractual structure in agriculture with endogenous matching," Journal of Development Economics, Elsevier, pages 239-249.
    11. repec:eee:touman:v:52:y:2016:i:c:p:82-95 is not listed on IDEAS
    12. Kaniska Dam, 2007. "A Two-Sided Matching Model of Monitored Finance," Working papers DTE 383, CIDE, División de Economía.
    13. Kaniska Dam, 2009. "A General Equilibrium Analysis of the Credit Market," Working papers DTE 461, CIDE, División de Economía.
    14. Roger, Guillaume, 2016. "Participation in moral hazard problems," Games and Economic Behavior, Elsevier, vol. 95(C), pages 10-24.
    15. Michael Kosfeld & Ferdinand A. von Siemens, 2011. "Competition, cooperation, and corporate culture," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 23-43, March.
    16. Norovsambuu Tumennasan, 2014. "Moral hazard and stability," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(3), pages 659-682, October.
    17. Li, Fei & Ueda, Masako, 2009. "Why do reputable agents work for safer firms?," Finance Research Letters, Elsevier, vol. 6(1), pages 2-12, March.
    18. repec:eee:touman:v:36:y:2013:i:c:p:602-612 is not listed on IDEAS
    19. Khoshyaran, M., 2004. "The new capitalists: a structural change from the stock market economy to the free market economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 344(1), pages 14-18.
    20. Hong, Suting, 2013. "Competition, syndication, and entry in the venture capital market," Working Papers 13-49, Federal Reserve Bank of Philadelphia.
    21. Ahmet Alkan & Alparslan Tuncay, 2014. "Pairing Games and Markets," Working Papers 2014.48, Fondazione Eni Enrico Mattei.
    22. Serfes, Konstantinos, 2013. "A Price Theory of Vertical and Lateral Integration under Two-Sided Productivity Heterogeneity," School of Economics Working Paper Series 2013-6, LeBow College of Business, Drexel University, revised 06 Mar 2014.

    More about this item

    Keywords

    principal-agent; moral hazard; matching; implementation;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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