- Implementation Of Optimal Contracts Under Adverse Selection
This paper studies the principal-multiagent model of a firm subject to adverse selection. We focus on agents who have complete information. We propose some desirable properties to be satisfied by mechanisms implementing the first-best in Nash equilibrium: (i) enforceability (a property related with the individual rationality of the mechanism), (ii) renegotiation-proofness, (iii) small strategy spaces, (iv) unique implementation, (v) unique best-reply and (vi) no mixed strategies. We prove that enforceability is not compatible with renegotiation-proofness or the unique best-reply property. Then we propose two mechanisms. The first one satisfies properties (i), (ii) and (iv). The second mechanism verifies all properties but enforceability.
|Date of creation:||Dec 1998|
|Publication status:||Published by Ivie|
|Contact details of provider:|| Postal: C/ Guardia Civil, 22, Esc 2a, 1o, E-46020 VALENCIA|
Phone: +34 96 319 00 50
Fax: +34 96 319 00 55
Web page: http://www.ivie.es/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Reichelstein, Stefan & Reiter, Stanley, 1988. "Game Forms with Minimal Message Spaces," Econometrica, Econometric Society, vol. 56(3), pages 661-692, May.
- Matthew O. Jackson, 1992.
"Implementation in Undominated Strategies: A Look at Bounded Mechanisms,"
Review of Economic Studies,
Oxford University Press, vol. 59(4), pages 757-775.
- Matthew 0. Jackson, 1989. "Implementation in Undominated Strategies - A Look at Bounded Mechanisms," Discussion Papers 833, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ma, Ching-to & Moore, John & Turnbull, Stephen, 1988. "Stopping agents from "cheating"," Journal of Economic Theory, Elsevier, vol. 46(2), pages 355-372, December.
- Bhaskar Dutta & Arunava Sen, 1991. "A Necessary and Sufficient Condition for Two-Person Nash Implementation," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 121-128.
- Demski, Joel S. & Sappington, David, 1984. "Optimal incentive contracts with multiple agents," Journal of Economic Theory, Elsevier, vol. 33(1), pages 152-171, June.
- Sappington, David & Demski, Joel S., 1983. "Multi-agent control in perfectly correlated environments," Economics Letters, Elsevier, vol. 13(4), pages 325-330.
- Glover Jonathan, 1994. "A Simpler Mechanism That Stops Agents from Cheating," Journal of Economic Theory, Elsevier, vol. 62(1), pages 221-229, February.
- Moore, John & Repullo, Rafael, 1990. "Nash Implementation: A Full Characterization," Econometrica, Econometric Society, vol. 58(5), pages 1083-1099, September.
- Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ivi:wpasad:1998-25. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Departamento de Edición)
If references are entirely missing, you can add them using this form.