Competing Mechanisms and Folk Theorems: Two Examples

28 Pages Posted: 6 Jun 2019

See all articles by Andrea Attar

Andrea Attar

Toulouse School of Economics; University of Roma Tor Vergata

Eloisa Campioni

University of Rome Tor Vergata - Dept. of Economics and Finance

Thomas Mariotti

Universite de Toulouse 1 Capitole

Gwenael Piaser

IPAG Business School

Date Written: June 5, 2019

Abstract

We study competing-mechanism games under exclusive competition: principals first simultaneously post mechanisms, then agents simultaneously choose to participate and communicate with at most one principal. In this setting, which is common to competing-auction and competitive-search applications, we develop two examples that question the relevance of the folk theorems for competing-mechanism games documented in the literature. The first example shows that there can exist pure-strategy equilibria in which some principal obtains a payoffs below her min-max payoffs, computed over all principals' decisions. Thus folk-theorem results may have to involve a bound on principals' payoffs that depends on the spaces of messages available to the agents, and not only on the players' available actions. The second example shows that even this non-intrinsic approach is misleading when agents' participation decisions are strategic: there can exist incentive-feasible allocations in which principals obtain payoffs above their min-max payoffs, computed over arbitrary spaces of mechanisms, but which cannot be supported in equilibrium.

Keywords: Competing Mechanisms, Folk Theorems, Exclusive Competition

JEL Classification: D82

Suggested Citation

Attar, Andrea and Campioni, Eloisa and Mariotti, Thomas and Piaser, Gwenaël, Competing Mechanisms and Folk Theorems: Two Examples (June 5, 2019). CEIS Working Paper No. 460. Available at SSRN: https://ssrn.com/abstract=3399541 or http://dx.doi.org/10.2139/ssrn.3399541

Andrea Attar

Toulouse School of Economics

21, allée de Brienne
Toulouse, F 31000
France
+33 5 61128578 (Phone)

University of Roma Tor Vergata ( email )

2 Via Columbia
00100 Rome
Italy

Eloisa Campioni (Contact Author)

University of Rome Tor Vergata - Dept. of Economics and Finance ( email )

Italy

Thomas Mariotti

Universite de Toulouse 1 Capitole ( email )

2 Rue du Doyen-Gabriel-Marty
Toulouse, 31042
France

Gwenaël Piaser

IPAG Business School ( email )

184 BD Saint Germain
Paris, 75006
France

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
12
Abstract Views
144
PlumX Metrics