On Multiple-Principal, Multiple-Agent Models of Moral Hazard

10 Pages Posted: 1 Jun 2005 Last revised: 26 Aug 2009

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

Gwenael Piaser

Universite du Luxembourg

Uday Rajan

Stephen M. Ross School of Business, University of Michigan

Date Written: June 11, 2008

Abstract

We provide two examples in a pure moral hazard setting with two principals and two agents. Example 1 shows that a strongly robust equilibrium in simple (direct) mechanisms can no longer be sustained as an equilibrium when a principal can deviate to an indirect communication scheme. Conversely, an equilibrium with one principal offering an indirect mechanism cannot be replicated as an equilibrium in simple mechanisms. Example 2 shows more directly that a payoff profile that can be achieved in equilibrium when one principal offers an indirect mechanism cannot be achieved as an equilibrium profile in simple mechanisms.

Keywords: D82

JEL Classification: Moral hazard, multiple principals, multiple agents

Suggested Citation

Attar, Andrea and Campioni, Eloisa and Piaser, Gwenael and Rajan, Uday, On Multiple-Principal, Multiple-Agent Models of Moral Hazard (June 11, 2008). Available at SSRN: https://ssrn.com/abstract=731629 or http://dx.doi.org/10.2139/ssrn.731629

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

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

Italy

Gwenael Piaser (Contact Author)

Universite du Luxembourg ( email )

148, avenue de la Faïencerie
Luxembourg, L-1511
Luxembourg
+ 352 46 66 44 6811 (Fax)

Uday Rajan

Stephen M. Ross School of Business, University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States
734-764-2310 (Phone)

HOME PAGE: http://webuser.bus.umich.edu/urajan

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