Thursday, July 21, 2016

On Competing Mechanisms under Exclusive Competition

Andrea Attar; Eloisa Campioni; and Gwenael Piaser provide thoughts On Competing Mechanisms under Exclusive Competition.

ABSTRACT:  We study games in which several principals design incentive schemes in the presence of privately informed agents. Competition is exclusive: each agent can participate with at most one principal, and principal-agents corporations are isolated. We analyze the role of standard incentive compatible mechanisms in these contexts. First, we provide a clarifying example showing how incentive compatible mechanisms fail to completely characterize equilibrium outcomes even if we restrict to pure strategy equilibria. Second, we show that truth-telling equilibria are robust against unilateral deviations toward arbitrary mechanisms. We then consider the single agent case and exhibit sufficient conditions for the validity of the revelation principle.

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