Games Played Through Agents

Andrea Prat and Aldo Rustichini

Econometrica, 2003, vol. 71, issue 4, 989-1026

Abstract: We introduce a game of complete information with multiple principals and multiple common agents. Each agent makes a decision that can affect the payoffs of all principals. Each principal offers monetary transfers to each agent conditional on the action taken by the agent. We characterize pure-strategy equilibria and we provide conditions-in terms of game balancedness-for the existence of an equilibrium with an efficient outcome. Games played through agents display a type of strategic inefficiency that is absent when either there is a unique principal or there is a unique agent. Copyright The Econometric Society 2003.

Date: 2003
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