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On multiple-principal multiple-agent models of moral hazard

Author

Listed:
  • Andrea Attar
  • Eloisa Campioni
  • Gwenaël Piaser

    (Luxembourg School of Finance, University of Luxembourg)

  • Uday Rajan

Abstract

In multiple-principal multiple-agent models of moral hazard, we provide sufficient conditions for the outcomes of pure-strategy equilibria in direct mechanisms to be preserved when principals can offer indirect communication schemes. The conditions include strong robustness in the direct mechanism game, as developed in the literature on competing mechanisms by Peters (2001) and Han (2007a), and a no-correlation property we define. We provide a rationale for restricting attention to take-it or leave-it offers, as is typically done in applications. We show via examples that it is necessary to allow direct mechanisms to be stochastic and to include private recommendations from principals to agents to preserve the corresponding equilibrium outcomes, and that the no-correlation condition is tight.

Suggested Citation

  • Andrea Attar & Eloisa Campioni & Gwenaël Piaser & Uday Rajan, 2007. "On multiple-principal multiple-agent models of moral hazard," LSF Research Working Paper Series 07-01, Luxembourg School of Finance, University of Luxembourg.
    • Handle: RePEc:crf:wpaper:07-01
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    Cited by:

    1. Hongyang He & Bin Zhang, 2022. "Effective Synergy of Market Agents: The Core of Achieving Multi-Agent Governance on the Internet Platform," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    2. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2018. "On competing mechanisms under exclusive competition," Games and Economic Behavior, Elsevier, vol. 111(C), pages 1-15.
    3. Rishi Basak & Edwin van der Werf, 2019. "Accountability mechanisms in international climate change financing," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 19(3), pages 297-313, June.
    4. repec:ebl:ecbull:v:4:y:2005:i:11:p:1-6 is not listed on IDEAS
    5. Gwenael Piaser, 2005. "Stochastic and deterministic menus in common agency games," Economics Bulletin, AccessEcon, vol. 4(11), pages 1-6.
    6. Anurag Gupta & Vikram Krishnamurthy, 2021. "Principal Agent Problem as a Principled Approach to Electronic Counter-Countermeasures in Radar," Papers 2109.03546, arXiv.org, revised Dec 2021.
    7. Andrea Attar & Eloisa Campioni & Gwenaël Piaser & Uday Rajan, 2012. "Competing mechanism games of moral hazard: communication and robustness," Review of Economic Design, Springer;Society for Economic Design, vol. 16(4), pages 283-296, December.
    8. repec:ipg:wpaper:2014-049 is not listed on IDEAS
    9. Miroslav Nedelchev, 2017. "Corporate Governance and ‘Principal-Principal’ Conflicts: the Case of the Banking System in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 117-135.
    10. Nedelchev, Miroslav, 2014. "Decrease of ‘Principal-Principal’ Conflicts," MPRA Paper 64541, University Library of Munich, Germany.
    11. Andrea Attar & Eloisa Campioni & Gwenael Piaser, 2011. "Information Revelation in Competing Mechanism Games," CEIS Research Paper 205, Tor Vergata University, CEIS, revised 04 Jul 2011.
    12. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2019. "Private communication in competing mechanism games," Journal of Economic Theory, Elsevier, vol. 183(C), pages 258-283.
    13. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2013. "Two-sided communication in competing mechanism games," Journal of Mathematical Economics, Elsevier, vol. 49(1), pages 62-70.
    14. Gwenaël Piaser, 2014. "Incentive compatible mechanisms in multiprincipal multiagent games," Working Papers 2014-49, Department of Research, Ipag Business School.
    15. Samir Wadhwa & Roy Dong, 2020. "Equilibrium Selection in Data Markets: Multiple-Principal, Multiple-Agent Problems with Non-Rivalrous Goods," Papers 2004.00196, arXiv.org, revised Mar 2023.

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    JEL classification:

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

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