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Existence of Equilibrium Mechanisms in Generalized Principal Agent Problems with Interacting Teams

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  • Brian Roberson

    (Purdue University, Department of Economics and Economic Science Institute, Chapman University)

Abstract

We study incentive design when multiple principals simultaneously design mechanisms for their respective teams in environments with strategic spillovers. In this environment, each principal’s set of incentive-compatible mechanisms—those that satisfy their own agents’ incentive compatibility constraints— depends on the mechanisms offered by the other teams. Following a classic example by Myerson (1982), such games may lack equilibrium due to discontinuities in the correspondence of incentive-compatible mechanisms. We establish general conditions for equilibrium existence by introducing a novel approach that involves tracking both the outcome distributions along the truthful-obedient path and the sets of outcome distributions achievable through unilateral deviations, thereby providing a foundation for analyzing a wide range of multi-principal mechanism design with team production and agency problems.

Suggested Citation

  • Brian Roberson, 2026. "Existence of Equilibrium Mechanisms in Generalized Principal Agent Problems with Interacting Teams," Working Papers 26-02, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:26-02
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/433/
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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