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Keeping the Agents in the Dark: Private Disclosures in Competing Mechanisms

Andrea Attar, Eloisa Campioni, Thomas Mariotti and Alessandro Pavan

No 21-1227, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study the design of market information in games in which several principals contract with several agents. We uncover a new dimension of mechanism design in this context, namely, the possibility for the principals to asymmetrically inform the agents of how their mechanisms operate, that is, respond to the agents’ messages. We document two effects of private disclosures. First, they raise the principals’ individual payoff guarantees, protecting them against their competitors’ threats. Second, they support equilibrium payoffs that cannot be supported in their absence, no matter how rich the message spaces are allowed to be. These results challenge the folk theorems à la Yamashita (2010) and the canonicity of the universal mechanisms of Epstein and Peters (1999), calling for a novel approach to competing-mechanism games. We propose one retaining key elements of classical mechanism-design theory and exploiting the strategic role of private disclosures to simplify the description of equilibrium communication.

Keywords: Incomplete Information; Competing Mechanisms; Private Disclosures; Signals; Universal Mechanisms; Folk Theorems (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2021-06, Revised 2023-12
New Economics Papers: this item is included in nep-cta, nep-des, nep-gth and nep-mic
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Related works:
Working Paper: Keeping the agents in the dark: private disclosures in competing mechanisms (2023) Downloads
Working Paper: Keeping the Agents in the Dark: Private Disclosures in Competing Mechanisms (2021) Downloads
Working Paper: Keeping the Agents in the Dark: Private Disclosures in Competing Mechanisms (2021) Downloads
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