Mediated contracts and mechanism design

Roland Strausz

Journal of Economic Theory, 2012, vol. 147, issue 3, 1280-1290

Abstract: The framework of incentive compatible finite direct coordination mechanisms in the sense of Myerson (1982) [5] is isomorphic to a framework of incentive compatible stochastic mediated contracts in the sense of Rahman and Obara (2010) [11] and Rahman (2009) [10]. The equivalence follows because the framework of Myerson (1982) [5] allows for a correlation between recommendations and transfers. The literature has hitherto not recognized the importance of this correlation for the structure of optimal contracts and for extending the revelation principle to address agency (moral hazard) problems.

Keywords: Mediated contracts; Mechanism design; Revelation principle; Mediation moral hazard; Agency models (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Working Paper: Mediated Contracts and Mechanism Design (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:3:p:1280-1290

DOI: 10.1016/j.jet.2012.01.005

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