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On Private Communication in Competing Mechanism Games

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We study competing mechanism games in which principals simultaneously design contracts to deal with several agents. We show that principals can profit from privately communicating with agents by generating incomplete information in the continuation game they play. Specifically, we construct an example of a complete information game in which none of the (multiple) equilibria in Yamashita (2010) survives against unilateral deviations to mechanisms involving private communication. This also contrasts with the robustness result established by Han (2007). The role of private communication we document may call for extending the standard construction of Epstein and Peters (1999) to incorporate this additional element.

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  • Andrea Attar & Eloisa Campioni & Gwenaël Piaser, 2017. "On Private Communication in Competing Mechanism Games," CEIS Research Paper 421, Tor Vergata University, CEIS, revised 16 Dec 2017.
  • Handle: RePEc:rtv:ceisrp:421
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    1. David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July.
    2. Han, Seungjin, 2007. "Strongly robust equilibrium and competing-mechanism games," Journal of Economic Theory, Elsevier, vol. 137(1), pages 610-626, November.
    3. Takuro Yamashita, 2010. "Mechanism Games With Multiple Principals and Three or More Agents," Econometrica, Econometric Society, vol. 78(2), pages 791-801, March.
    4. Germana Corrado & Luisa Corrado & Giuseppe De Michele & Francesco Salustri, 2017. "Are Perceptions of Corruption Matching Reality? Theory and Evidence from Microdata," CEIS Research Paper 420, Tor Vergata University, CEIS, revised 14 Dec 2017.
    5. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël & Rajan, Uday, 2010. "On multiple-principal multiple-agent models of moral hazard," Games and Economic Behavior, Elsevier, vol. 68(1), pages 376-380, January.
    6. Epstein, Larry G. & Peters, Michael, 1999. "A Revelation Principle for Competing Mechanisms," Journal of Economic Theory, Elsevier, vol. 88(1), pages 119-160, September.
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    Cited by:

    1. Andrea Attar & Eloisa Campioni & Thomas Mariotti & Gwenael Piaser, 2019. "Competing Mechanisms and Folk Theorems: Two Examples," CEIS Research Paper 460, Tor Vergata University, CEIS, revised 06 Jun 2019.
    2. Tommaso Proietti & Niels Haldrup & Oskar Knapik, 2017. "Spikes and memory in (Nord Pool) electricity price spot prices," CEIS Research Paper 422, Tor Vergata University, CEIS, revised 18 Dec 2017.

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