Robust Contracts in Common Agency

Keeler Marku, Sergio Ocampo and Jean-Baptiste Tondji
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Jean-Baptiste Tondji: University of Texas Rio Grande Valley

No 20222, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: We consider a game between several principals and a common agent, where principals know only a subset of the agent’s available actions. Principals demand robustness and evaluate contracts on a worst-case basis. This robust approach allows for a crisp characterization of the equilibrium contracts and payoffs and provides a novel proof of equilibrium existence in common agency by constructing a pseudo-potential for the game. Robust contracts make explicit how the efficiency of the equilibrium outcome relative to collusion among principals depends on the principals’ ability to extract payments from the agent.

Keywords: Common Agency; Robustness; Worst Case; Efficiency (search for similar items in EconPapers)
JEL-codes: C72 D81 D86 H21 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth and nep-mic
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Citations: View citations in EconPapers (2)

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Journal Article: Robust contracts in common agency (2024)
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