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Robust Equilibria in General Competing Mechanism Games

Seungjin Han ()

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Abstract: This paper proposes a general competing mechanism game of incomplete information where a mechanism allows its designer to send a message to himself at the same time agents send messages. This paper introduces various notions of robust perfect Bayesian equilibrium (PBE). Given the additive separability of each agent's utility function with respect to principals' actions, this paper provides the full characterization of equilibrium allocations in terms of Bayesian incentive compatible (BIC) direct mechanisms for each notion of robust PBE, without reference to the set of arbitrary mechanisms allowed in the game. Szentes' Critique (Szentes (2010)) on the standard competing mechanism game of complete information is valid in a model with incomplete information, regarding the set of allocations supportable in robust PBEs where agents' strategies of communicating with non-deviating principals and their induced BIC direct mechanisms are responsive to market changes.

Date: 2021-09, Revised 2022-11
New Economics Papers: this item is included in nep-cta, nep-des, nep-gth and nep-mic
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