Menu Auctions and Influence Games with Private Information

52 Pages Posted: 27 Feb 2015

See all articles by David Martimort

David Martimort

Paris School of Economics (PSE)

Lars Stole

University of Chicago - Booth School of Business

Date Written: February 23, 2015

Abstract

We study games in which multiple principals influence the choice of a privately-informed agent by offering action-contingent payments. We characterize the equilibrium allocation set as the maximizers of an endogenous aggregate virtual-surplus program. The aggregate maximand for every equilibrium includes an information-rent margin which captures the confluence of the principals’ rent-extraction motives. We illustrate the economic implications of this novel margin in two applications: a public goods game in which players incentivize a common public good supplier, and a lobbying game between conflicting interest groups who offer contributions to influence a common political decision-maker.

Keywords: menu auctions, influence games, common agency, screening contracts, public goods games, lobbying games

JEL Classification: D82

Suggested Citation

Martimort, David and Stole, Lars A., Menu Auctions and Influence Games with Private Information (February 23, 2015). Available at SSRN: https://ssrn.com/abstract=2569703 or http://dx.doi.org/10.2139/ssrn.2569703

David Martimort

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Lars A. Stole (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)

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