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Endogenous Games and Mechanisms: Side Payments Among Players

  • Matthew O. Jackson

    (California Institute of Technology)

  • Simon Wilkie

    (California Institute of Technology)

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of examples, including voluntary contribution public good games, Cournot and Bertrand oligopoly, principal-agent problems, and commons games, among others.

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Paper provided by EconWPA in its series Microeconomics with number 0211008.

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Date of creation: 04 Nov 2002
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Handle: RePEc:wpa:wuwpmi:0211008
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  4. Varian, H.R., 1991. "Sequential Provision of Public Goods," Papers 14, Michigan - Center for Research on Economic & Social Theory.
  5. Jackson, Matthew O., 1999. "A Crash Course in Implementation Theory," Working Papers 1076, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. Chaim Fershtman & Kenneth L. Judd & Ehud Kalai, 1990. "Observable Contracts: Strategic Delegation and Cooperation," Discussion Papers 879, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  11. Miller, Nolan H & Pazgal, Amit I, 2001. "The Equivalence of Price and Quantity Competition with Delegation," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 284-301, Summer.
  12. Bensaid, B. & Gary-Bobo, R., 1991. "An Exact Formula for the Lion's Share : a Model of Pre-Play Negotiation," CORE Discussion Papers 1991059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Leonid Hurwicz, 1994. "Economic design, adjustment processes, mechanisms, and institutions," Review of Economic Design, Springer, vol. 1(1), pages 1-14, December.
  14. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
  15. Buchhilz, W. & Konrad, K.A. & Lommerund, K.E., 1997. "Stackelberg Leadership and Transfers in Private Provision of Public Goods," Norway; Department of Economics, University of Bergen 170, Department of Economics, University of Bergen.
  16. repec:tpr:qjecon:v:101:y:1986:i:1:p:1-31 is not listed on IDEAS
  17. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
  18. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
  19. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
  20. Kalai, Ehud, 1981. "Preplay negotiations and the prisoner's dilemma," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 375-379, August.
  21. Andreoni,J. & Varian,H., 1999. "Pre-play contracting in the prisoners' dilemma," Working papers 18, Wisconsin Madison - Social Systems.
  22. Ehud Kalai & Dov Samet, 1983. "Unanimity Games and Pareto Optimality," Discussion Papers 546, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  23. Guttman, Joel M, 1987. "A Non-Cournot Model of Voluntary Collective Action," Economica, London School of Economics and Political Science, vol. 54(213), pages 1-19, February.
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