A folk theorem for competing mechanisms

Peters, Michael; Troncoso-Valverde, Cristián

doi:10.1016/j.jet.2013.01.001

Cited by 28 publications

(39 citation statements)

References 16 publications

(15 reference statements)

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“…The only question that seemed to remain is what this set looked like. The paper by [15] provided the first bit of an answer, while at the same time extending the approach to general games (in which all players in a game acted as both principals and agents. Given any Bayesian normal form game as a default game, it is possible to create a 'competing mechanism' game on top of this normal form game by allowing players to write contracts that make commitments to their actions in the default game.…”

Section: A Short Digression On the Literaturementioning

confidence: 99%

“…Given any Bayesian normal form game as a default game, it is possible to create a 'competing mechanism' game on top of this normal form game by allowing players to write contracts that make commitments to their actions in the default game. [15] used the approach in [14] to show that the set of outcome functions supportable as Bayesian equilibria in the competing mechanism game is always at least as large as the set of incentive compatible and individually rational outcome functions as defined in Myerson's text ( [2]). …”

Section: A Short Digression On the Literaturementioning

confidence: 99%

“…The subtle difference between the result in [15] and Myerson is that when the Myerson coordinator punishes a player who doesn't participate, he or she is constrained to implement a punishment that is independent of what the nonparticipant decides to do. In a Yamashita like recommendation game, this isn't the case.…”

Section: A Short Digression On the Literaturementioning

confidence: 99%

“…The description of universal types in [4] is very abstract, while the games described in [14] or [15] are hard to describe because of the complex communication that occurs between players. The common agency literature (for example [5] or [8] or [11]) describe simpler games by focusing on very special kinds of contracts.…”

Section: What Is a Competing Mechanism Gamementioning

confidence: 99%

“…The public messages involve encrypted variables. The treatment here is taken from [15]. Encryption begins with a publicly known function κ :…”

Section: Reciprocal Contractingmentioning

confidence: 99%

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Reciprocal contracting

Peters

2015

Journal of Economic Theory

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This paper models competing mechanism games as extensive games where the extensive form is incompletely understood by a modeler, typically because the modeler doesn't see all the messages that are being exchanged and doesn't understand all the contracts that can be enforced. For this reason, the revelation principle can't be used to characterize supportable outcomes. The paper provides a relatively weak restriction, referred to as regularity, on the unknown part the competing mechanism game. This condition makes it possible to characterize the set of supportable equilibrium outcomes of the unknown game using information about the part of the game the modeler does understand. In addition, the paper provides a canonical game called the reciprocal contracting game which supports as an equilibrium every equilibrium outcome of any regular competing mechanism game that embeds the known part of the game. As a consequence, the reciprocal contracting game can be used as a stand-in for the true game.

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Section: A Short Digression On the Literaturementioning

confidence: 99%

Section: A Short Digression On the Literaturementioning

confidence: 99%

Section: A Short Digression On the Literaturementioning

confidence: 99%

Section: What Is a Competing Mechanism Gamementioning

confidence: 99%

“…The public messages involve encrypted variables. The treatment here is taken from [15]. Encryption begins with a publicly known function κ :…”

Section: Reciprocal Contractingmentioning

confidence: 99%

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Reciprocal contracting

Peters

2015

Journal of Economic Theory

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Competing mechanism games of moral hazard: communication and robustness

et al. 2012

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In multiple-principal multiple-agent models of moral hazard, we provide sufficient conditions for the outcomes of pure-strategy equilibria in simple mechanisms to be preserved when principals can offer indirect communication schemes. The conditions include strong robustness in the simple mechanism game, as developed in the literature on competing mechanisms by Peters (2001) and Han (2007), and a no-correlation property we define. We show via an example that the no-correlation condition is tight in moral hazard models. Finally, we provide a rationale for restricting attention to take-it or leave-it offers, as is typically done in applications

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On take it or leave it offers in common agency

Han

2012

Economics Letters

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If the agent's preference relation satisfies a strict monotonicity condition in common agency under the asymmetric information, the set of all equilibrium allocations in the menu game where menus of contracts are allowed coincides with the set of all equilibrium allocations in the single contract game where only single contracts are allowed. * This paper supersedes the paper "Competition relative to Incentive Contracts in Common Agency." It is based on my research during the sabbatical visit to Boston University. I thank their hospitality. I also thank seminar audience at Boston University and University of Western Ontario for their comments. I thankfully acknowledge financial support from SSHRC of Canada.

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A folk theorem for competing mechanisms

Cited by 28 publications

References 16 publications

Reciprocal contracting

Reciprocal contracting

Competing mechanism games of moral hazard: communication and robustness

On take it or leave it offers in common agency

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