Contractible contracts in common agency problems

Balázs Szentes

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This article analyses contractual situations between many principals and many agents. The agents have private information, and the principals take actions. Principals have the ability to contract not only on the reports of the agents but also on the contracts offered by other principals. Contracts are required to be representable in a formal language. The main result of the article is a characterization of the allocations that can be implemented as equilibria in our contracting game. We then restrict attention to exclusive-contracting environments, in which the agent may select the contract of at most one principal. In this setting, our characterization result implies that principals can collude to implement the monopolist outcome. Finally, in general, equilibrium contracts turn out to be incomplete. That is, a contract will restrict the action space of a principal but will not necessarily determine a single action.

Keywords: common agency; contractible contracts (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Date: 2015-01-01
New Economics Papers: this item is included in nep-cse, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Published in Review of Economic Studies, 1, January, 2015, 82(1), pp. 391 - 422. ISSN: 0034-6527

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:66071

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