Competing Mechanism Games of Moral Hazard: Communication and Robustness
16 Pages Posted: 20 Jun 2011
Date Written: June 2011
We consider multiple-principal multiple-agent models of moral hazard: Principals compete through mechanisms in the presence of agents who take unobservable actions. In this context, we provide a rationale for restricting principals to make use of simple mechanisms, which correspond to direct mechanisms in the standard framework of Myerson (1982). Our results complement those of Han (2007) who analyzes a complete information setting where agents’ actions are fully contractible.
Keywords: Moral hazard, multiple-principal multiple-agent, simple mechanisms
JEL Classification: D82, D86
Suggested Citation: Suggested Citation