Truthful Revelation Mechanisms for Simultaneous Common Agency Games

AMERICAN ECONOMIC JOURNAL: MICROECONOMICS, Vol. 2, No. 2, pp. 132-190, May 2010

61 Pages Posted: 1 Oct 2007 Last revised: 4 Jun 2010

See all articles by Alessandro Pavan

Alessandro Pavan

Northwestern University

Giacomo Calzolari

European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR); University of Bologna

Date Written: May 2010

Abstract

This paper considers games in which multiple principals contract simultaneously and noncooperatively with the same agent. We introduce a new class of revelation mechanisms which, although they do not always permit a complete equilibrium characterization, do facilitate the characterization of the equilibrium outcomes that are typically of interest in applications. We then show how these mechanisms can be put to work in applications such as menu auctions, competition in nonlinear tariffs, and moral hazard settings. Lastly, we show how one can enrich the revelation mechanisms, albeit at a cost of an increase in complexity, to characterize all possible equilibrium outcomes, including those sustained by non-Markov strategies and/or mixed-strategy profiles.

Keywords: Mechanism design, contracts, revelation principle, menus, endogenous payoff-relevant information

JEL Classification: D89, C72

Suggested Citation

Pavan, Alessandro and Calzolari, Giacomo, Truthful Revelation Mechanisms for Simultaneous Common Agency Games (May 2010). AMERICAN ECONOMIC JOURNAL: MICROECONOMICS, Vol. 2, No. 2, pp. 132-190, May 2010, Available at SSRN: https://ssrn.com/abstract=1017745

Alessandro Pavan (Contact Author)

Northwestern University ( email )

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Giacomo Calzolari

European University Institute - Economics Department (ECO) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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University of Bologna ( email )

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HOME PAGE: http://sites.google.com/view/giacomo-calzolari

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