original papers: Multiprincipals multiagents incentive design

Semih Koray () and Rudolf Kerschbamer
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Semih Koray: Department of Economics, Bilkent University, 06533 Bilkent, Ankara, Turkey

Review of Economic Design, 2001, vol. 6, issue 1, 5-40

Abstract: This paper studies a simple setting in which the contractual arrangements which determine the incentives for agents are not designed by a single central planner, but are themselves the outcome of a game among multiple noncooperatively acting principals. The notion of an Epsilon Contracting Equilibrium is introduced to predict the outcome of the contract-design game among principals. Symmetric pure strategy Epsilon Contracting Equlibria may not exist in perfectly symmetric environments. In a symmetric Epsilon Contracting Equilibrium in mixed strategies coordination failure may lead to a suboptimal institutional network in which the agents "cheat" their principals.

Keywords: Adverse selection; multiprincipals; multiagents; epsilon contracting equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2001-04-17
Note: Received: 14 June 1995 / Accepted: 09 August 1999
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