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Direct Mechanisms, Menus and Latent Contracts

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  • Piaser, Gwenaël

Abstract

In common agency games, one cannot characterize all equilibria by considering only direct mechanisms. In an attempt to overcome this difficulty, Peters [Econometrica, 2001]and Martimort and Stole [Econometrica, 2002] identified a class of indirect mechanisms (namely, menus) which are able to characterize every equilibrium. Unfortunately, menus are difficult to handle, and several methodologies have been proposed in the literature. Here, it is shown that, even if authors consider menus rather than simpler mechanisms, many equilibria described in the literature could have been characterized by direct incentive compatible mechanisms. Use of more sophisticated mechanisms was not necessary in these cases.

Suggested Citation

  • Piaser, Gwenaël, 2007. "Direct Mechanisms, Menus and Latent Contracts," MPRA Paper 7049, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:7049
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    File URL: https://mpra.ub.uni-muenchen.de/7049/1/MPRA_paper_7049.pdf
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    Cited by:

    1. Andrea Attar & Thomas Mariotti & François Salanié, 2011. "Nonexclusive Competition in the Market for Lemons," Econometrica, Econometric Society, vol. 79(6), pages 1869-1918, November.
    2. Gwenaël Piaser, 2014. "Common Agency Games with Common Value Exclusion, Convexity and Existence," Working Papers 2014-420, Department of Research, Ipag Business School.
    3. Alessandro Pavan & Giacomo Calzolari, 2010. "Truthful Revelation Mechanisms for Simultaneous Common Agency Games," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 132-190, May.

    More about this item

    Keywords

    Common Agency; Revelation Principle; Delegation Principle; Direct Mechanisms; Menus; Latent Contracts;

    JEL classification:

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

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