The Revelation and Delegation Principles in Common Agency Games

Abstract

In the context of common agency adverse-selection games we illustrate that the revelation principle cannot be applied to study equilibria of the multi-principal games. We then demonstrate that an extension of the taxation principle - what we term the delegation principle - can be used to characterize the set of all common agency equilibria.

Keywords: Revelation Principle, Delegation Principle, Taxation Principle, Common Agency, Adverse Selection

JEL Classification: D82, L51