Keeping the Agents in the Dark: Private Disclosures in Competing Mechanisms

34 Pages Posted: 2 Nov 2021

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

Alessandro Pavan

Northwestern University

Date Written: October 21, 2021

Abstract

We study games in which several principals contract with several privately-informed agents. We show that enabling the principals to engage in contractible private disclosures { by sending private signals to the agents about how the mechanisms will respond to the agents' messages { can significantly affect the predictions of such games. Our first result shows that private disclosures may generate equilibrium outcomes that cannot be supported in any game without private disclosures, no matter the richness of the message spaces and the availability of public randomizing devices. The result thus challenges the canonicity of the universal mechanisms of Epstein and Peters (1999). Our second result shows that equilibrium outcomes of games without private disclosures need not be sustainable when private disclosures are allowed. The result thus challenges the robustness of the "folk theorems" of Yamashita (2010) and Peters and Troncoso-Valverde (2013). These findings call for a novel approach to the analysis of competing-mechanism games.

Keywords: Incomplete Information, Competing Mechanisms, Private Disclosures, Signals, Universal Mechanisms, Folk Theorems.

JEL Classification: D82

Suggested Citation

Attar, Andrea and Campioni, Eloisa and Mariotti, Thomas and Pavan, Alessandro, Keeping the Agents in the Dark: Private Disclosures in Competing Mechanisms (October 21, 2021). CEIS Working Paper No. 519, Available at SSRN: https://ssrn.com/abstract=3947186 or http://dx.doi.org/10.2139/ssrn.3947186

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

Alessandro Pavan

Northwestern University

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