Interacting mechanisms: a perspective on generalized principal-agent problems

Françoise Forges (), Frederic Koessler and Andrés Salamanca Lugo ()
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Françoise Forges: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres
Andrés Salamanca Lugo: University of Ca’ Foscari [Venice, Italy]

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Abstract: Myerson (1982) formalizes general principal-agent problems, in which agents have private information and choose actions. His contribution is best known for a version of the revelation principle in the case of a single principal but he also introduces a model of interacting principals. We push the latter forward by studying the perfect Bayesian equilibrium outcomes of the corporations' game in which every principal proposes a mechanism to his agents. We show that several versions of the revelation principle hold in our framework and that, under certain conditions, every principals' equilibrium, as defined in Myerson (1982), is a perfect Bayesian equilibrium outcome of the corporations' game.

Keywords: communication equilibrium; corporations; correlated equilibrium; mechanism design; multiple principals; perfect Bayesian equilibrium; revelation principle; robust equilibrium (search for similar items in EconPapers)
Date: 2024-02-28
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Journal Article: Interacting mechanisms: A perspective on generalized principal–agent problems (2024)
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