Bayesian-Nash vs dominant-strategy implementation with countervailing incentives: the two-type case

Annalisa Vinella

Economics Bulletin, 2010, vol. 30, issue 1, 636-649

Abstract: We extend the principal/one-agent model with countervailing incentives to a framework in which the principal deals with two agents behaving non-cooperatively and protected by limited liability. Focusing on the two-type case, we show that, beside the situation in which first best is effected even without relying on type correlation, dominant-strategy implementation yields no penalty to the principal, with respect to Bayesian-Nash implementation, when the principal faces, on the opposite, very tight constraints.

Keywords: Countervailing incentives; Type correlation; Bayesian-Nash implementation; Dominant-strategy implementation (search for similar items in EconPapers)
JEL-codes: D8 (search for similar items in EconPapers)
Date: 2010-03-02
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