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Reciprocal Relationships and Mechanism Design

Listed author(s):
  • Celik, Gorkem
  • Peters, Michael

We study an incomplete information game in which players are involved in a reciprocal relationship that allows them to coordinate their actions by contracting among themselves. We model this as a competing mechanism game in which players have the ability to write contracts. We characterize the set of outcome functions that can be supported as equilibrium in this enhanced game. We use our characterization to show that the set of supportable outcomes is bigger than the set of outcomes supported by a centralized mechanism designer who can offer mechanisms in which all players participate. The difference is that the contracting game makes it possible for players to convey partial information about their type at the time they offer contracts.

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File URL: http://montoya.econ.ubc.ca/svn/equilibrium_rejection/negotiated_mechanisms/working_paper/reciprocal_mechanisms.pdf
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Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number gorkem_celik-2011-19.

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Length: 0 pages
Date of creation: 01 Aug 2011
Date of revision: 01 Aug 2011
Handle: RePEc:ubc:pmicro:gorkem_celik-2011-19
Contact details of provider: Web page: http://www.economics.ubc.ca/

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  1. Laffont, J.J. & Martimort, D., 1996. "Collusion Under Asymmetric Information," Papers 95.389, Toulouse - GREMAQ.
  2. Cramton, Peter C. & Palfrey, Thomas R., 1986. "Cartel Enforcement with Uncertainty About Costs," Working Papers 619, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Celik, Gorkem & Peters, Michael, 2008. "Equilibrium Rejection of a Mechanism," Microeconomics.ca working papers gorkem_celik-2008-10, Vancouver School of Economics, revised 06 Aug 2008.
  4. ehiel, Philippe & Benny Moldovanu & Ennio Stacchetti, 1994. "How (not) to sell nuclear weapons," Discussion Paper Serie B 288, University of Bonn, Germany.
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  7. Emir Kamenica & Matthew Gentzkow, 2009. "Bayesian Persuasion," NBER Working Papers 15540, National Bureau of Economic Research, Inc.
  8. Thomas Philippon & Vasiliki Skreta, 2010. "Optimal Interventions in Markets with Adverse Selection," NBER Working Papers 15785, National Bureau of Economic Research, Inc.
  9. Tan, Guofu & Yilankaya, Okan, 2007. "Ratifiability of efficient collusive mechanisms in second-price auctions with participation costs," Games and Economic Behavior, Elsevier, vol. 59(2), pages 383-396, May.
  10. Jean Tirole, 2012. "Overcoming Adverse Selection: How Public Intervention Can Restore Market Functioning," American Economic Review, American Economic Association, vol. 102(1), pages 29-59, February.
  11. Laffont, Jean-Jacques & Martimort, David, 1998. "Mechanism Design with Collusion and Correlation," IDEI Working Papers 81, Institut d'Économie Industrielle (IDEI), Toulouse.
  12. Cramton, Peter C. & Palfrey, Thomas R., 1990. "Ratifiable Mechanisms: Learning from Disagreement," Working Papers 731, California Institute of Technology, Division of the Humanities and Social Sciences.
  13. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
  14. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
  15. Jeanne Hagenbach & Frédéric Koessler & Eduardo Perez-Richet, 2014. "Certifiable Pre-Play Communication: Full Disclosure," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01053478, HAL.
  16. Maskin, Eric & Tirole, Jean, 1992. "The Principal-Agent Relationship with an Informed Principal, II: Common Values," Econometrica, Econometric Society, vol. 60(1), pages 1-42, January.
  17. Bernard Caillaud & Philippe Jehiel, 1998. "Collusion in Auctions with Externalities," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 680-702, Winter.
  18. Gorkem Celik, 2015. "Implementation by Gradual Revelation," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 271-296, 06.
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