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On the Use of Menus in Sequential Common Agency

Author

Listed:
  • Giacomo Calzolari
  • Alessandro Pavan

Abstract

We illustrate, by means of two examples, why assuming the principals offer simple menus (i.e. collections of payoff-relevant alternatives) as opposed to more general mechanisms may preclude a complete characterization of the set of equilibrium outcomes in certain sequential contracting environments. We then discuss how refinements of the solution concept, or enrichments of the menus that allow for recommendations, may restore the possibility of using menus to obtain a complete equilibrium characterization.

Suggested Citation

  • Giacomo Calzolari & Alessandro Pavan, 2008. "On the Use of Menus in Sequential Common Agency," Discussion Papers 1498, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:1498
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    File URL: http://faculty.wcas.northwestern.edu/~apa522/MENUS.pdf
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    Cited by:

    1. Pavan, Alessandro & Calzolari, Giacomo, 2009. "Sequential contracting with multiple principals," Journal of Economic Theory, Elsevier, vol. 144(2), pages 503-531, March.
    2. Andrea Attar & Catherine Casamatta & Arnold Chassagnon & Jean Paul Décamps, 2019. "Contracting Sequentially with Multiple Lenders: The Role of Menus," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(4), pages 977-990, June.
    3. Peters, Michael, 2015. "Reciprocal contracting," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 102-126.
    4. Peters, Michael, 2010. "On the Revelation Principle and Reciprocal Mechanisms in Competing Mechanism Games," Microeconomics.ca working papers michael_peters-2010-18, Vancouver School of Economics, revised 19 Feb 2014.

    More about this item

    Keywords

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    JEL classification:

    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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