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Endogenous Games and Mechanisms: Side Payments Among Players

Listed author(s):
  • Wilkie, Simon
  • Jackson, Matthew O.

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. Copyright 2005, Wiley-Blackwell.

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File URL: http://www.hss.caltech.edu/SSPapers/sswp1150c.pdf
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Paper provided by California Institute of Technology, Division of the Humanities and Social Sciences in its series Working Papers with number 1150.

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Date of creation: Nov 2002
Publication status: Published: published in Review of Economic Studies, 2005, V. 72, pp. 543-566.
Handle: RePEc:clt:sswopa:1150
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  9. Andreoni,J. & Varian,H., 1999. "Pre-play contracting in the prisoners' dilemma," Working papers 18, Wisconsin Madison - Social Systems.
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  14. Fershtman, Chaim & Nitzan, Shmuel, 1991. "Dynamic voluntary provision of public goods," European Economic Review, Elsevier, vol. 35(5), pages 1057-1067, July.
  15. Miller, Nolan H & Pazgal, Amit I, 2001. "The Equivalence of Price and Quantity Competition with Delegation," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 284-301, Summer.
  16. Ehud Kalai & Dov Samet, 1983. "Unanimity Games and Pareto Optimality," Discussion Papers 546, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  17. Anderlini, Luca & Felli, Leonardo, 2001. "Costly Bargaining and Renegotiation," Econometrica, Econometric Society, vol. 69(2), pages 377-411, March.
  18. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
  19. Lagunoff, Roger, 1992. "Fully Endogenous Mechanism Selection on Finite Outcome Sets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(4), pages 465-480, October.
  20. B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
  21. Kalai, Ehud, 1981. "Preplay negotiations and the prisoner's dilemma," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 375-379, August.
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  23. Ilya Segal, 1999. "Contracting with Externalities," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 337-388.
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