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Role of Linking Mechanisms in Multitask Agency with Hidden Information

Listed author(s):
  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

  • Koichi Miyazaki

    (Department of Economics, Pennsylvania State University)

  • Nobuyuki Yagi

    (Graduate School of Economics, University of Tokyo)

We investigate the adverse selection problem where a principal delegates multiple tasks to individuals. The individuals form a group as a single agent and share their private signals in order to maximize their average payoff. We characterize the virtually implementable social choice functions by using the linking mechanism proposed by Jackson and Sonnenschein (2005) that restricts the message spaces. The principal does not require any incentive wage schemes and can therefore avoid any information rent and welfare loss due to risk aversion. We show the resemblance between the functioning of this message space restriction and that of incentive wage schemes.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2006/2006cf401.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-401.

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Length: 37pages
Date of creation: Feb 2006
Handle: RePEc:tky:fseres:2006cf401
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  1. Matsushima, Hitoshi, 2007. "Mechanism design with side payments: Individual rationality and iterative dominance," Journal of Economic Theory, Elsevier, vol. 133(1), pages 1-30, March.
  2. Casella, Alessandra & Gelman, Andrew & Palfrey, Thomas R., 2006. "An experimental study of storable votes," Games and Economic Behavior, Elsevier, vol. 57(1), pages 123-154, October.
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  4. Georg Kirchsteiger & Ernst Fehr & Simon Gächter, 1997. "Reciprocity as a contract enforcement device: experimental evidence," ULB Institutional Repository 2013/5911, ULB -- Universite Libre de Bruxelles.
  5. Alessandra Casella, 2002. "Storable Votes," NBER Working Papers 9189, National Bureau of Economic Research, Inc.
  6. Ernst Fehr, 2003. "Psychological Foundations of Incentives," Microeconomics 0305010, EconWPA.
  7. Casella, Alessandra & Palfrey, Thomas & Riezman, Raymond, 2008. "Minorities and Storable Votes," Quarterly Journal of Political Science, now publishers, vol. 3(2), pages 165-200, July.
  8. Hanming Fang & Peter Norman, 2003. "An Efficiency Rationale for Bundling of Public Goods," Cowles Foundation Discussion Papers 1441, Cowles Foundation for Research in Economics, Yale University.
  9. Dirk Engelmann & Veronika Grimm, 2012. "Mechanisms for Efficient Voting with Private Information about Preferences," Economic Journal, Royal Economic Society, vol. 122(563), pages 1010-1041, 09.
  10. Dirk Engelmann & Veronika Grimm, 2006. "Overcoming Incentive Constraints? The (In-)effectiveness of Social Interaction," Working Paper Series in Economics 22, University of Cologne, Department of Economics.
  11. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
  12. Johnson, Scott & Pratt, John W & Zeckhauser, Richard J, 1990. "Efficiency Despite Mutually Payoff-Relevant Private Information: The Finite Case," Econometrica, Econometric Society, vol. 58(4), pages 873-900, July.
  13. Debraj Ray & Kfir Eliaz & Ronny Razin, 2004. "Group Decision-Making in the Shadow of Disagreement," Working Papers 2004.83, Fondazione Eni Enrico Mattei.
  14. Hitoshi Matsushima, 1998. "Multimarket Contact, Imperfect Monitoring, and Implicit Collusion," CIRJE F-Series CIRJE-F-24, CIRJE, Faculty of Economics, University of Tokyo.
  15. Matsushima, Hitoshi, 1991. "Incentive compatible mechanisms with full transferability," Journal of Economic Theory, Elsevier, vol. 54(1), pages 198-203, June.
  16. Aoyagi, Masaki, 1998. "Correlated Types and Bayesian Incentive Compatible Mechanisms with Budget Balance," Journal of Economic Theory, Elsevier, vol. 79(1), pages 142-151, March.
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  18. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
  19. Itoh Hideshi, 1993. "Coalitions, Incentives, and Risk Sharing," Journal of Economic Theory, Elsevier, vol. 60(2), pages 410-427, August.
  20. Chung, Kim-Sau, 1999. "A Note on Matsushima's Regularity Condition," Journal of Economic Theory, Elsevier, vol. 87(2), pages 429-433, August.
  21. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
  22. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-1257, November.
  23. Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, 01.
  24. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
  25. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-361, March.
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