Addressing Strategic Uncertainty with Incentives and Information

Marina Halac, Elliot Lipnowski and Daniel Rappoport

AEA Papers and Proceedings, 2022, vol. 112, 431-37

Abstract: A principal privately contracts with a set of agents who then simultaneously make a binary decision. Each contract specifies an individual allocation and the information the agent is given about a fundamental state and other agents' contracts. We study the principal's optimal scheme that induces a desired action profile as the unique rationalizable outcome. Our main result reduces this multiagent problem to a two-step procedure where information is designed agent-by-agent: the principal chooses a fundamental-state-contingent distribution over agent rankings and, separately for each agent, the agent's information about the realized ranking and fundamental states. We illustrate with a team-production application.

JEL-codes: D81 D82 D86 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1257/pandp.20221087

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