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On multiple-principal multiple-agent models of moral hazard

Author

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  • Attar, Andrea
  • Campioni, Eloisa
  • Piaser, Gwenaël
  • Rajan, Uday

Abstract

We provide two examples in a pure moral hazard setting with two principals and two agents. Example 1 shows that a strongly robust equilibrium in simple (direct) mechanisms can no longer be sustained as an equilibrium when a principal can deviate to an indirect communication scheme. Conversely, an equilibrium with one principal offering an indirect mechanism cannot be replicated as an equilibrium in simple mechanisms. Example 2 shows more directly that a payoff profile that can be achieved in equilibrium when one principal offers an indirect mechanism cannot be achieved as an equilibrium profile in simple mechanisms.

Suggested Citation

  • Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël & Rajan, Uday, 2010. "On multiple-principal multiple-agent models of moral hazard," Games and Economic Behavior, Elsevier, vol. 68(1), pages 376-380, January.
    • Handle: RePEc:eee:gamebe:v:68:y:2010:i:1:p:376-380
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    References listed on IDEAS

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    1. Peters, Michael, 2001. "Common Agency and the Revelation Principle," Econometrica, Econometric Society, vol. 69(5), pages 1349-1372, September.
    2. David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July.
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    Cited by:

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    2. Anurag Gupta & Vikram Krishnamurthy, 2021. "Principal Agent Problem as a Principled Approach to Electronic Counter-Countermeasures in Radar," Papers 2109.03546, arXiv.org, revised Dec 2021.
    3. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2019. "Private communication in competing mechanism games," Journal of Economic Theory, Elsevier, vol. 183(C), pages 258-283.
    4. Hongyang He & Bin Zhang, 2022. "Effective Synergy of Market Agents: The Core of Achieving Multi-Agent Governance on the Internet Platform," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    5. Andrea Attar & Eloisa Campioni & Gwenaël Piaser & Uday Rajan, 2012. "Competing mechanism games of moral hazard: communication and robustness," Review of Economic Design, Springer;Society for Economic Design, vol. 16(4), pages 283-296, December.
    6. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2018. "On competing mechanisms under exclusive competition," Games and Economic Behavior, Elsevier, vol. 111(C), pages 1-15.
    7. repec:ipg:wpaper:2014-049 is not listed on IDEAS
    8. Miroslav Nedelchev, 2017. "Corporate Governance and ‘Principal-Principal’ Conflicts: the Case of the Banking System in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 117-135.
    9. Nedelchev, Miroslav, 2014. "Decrease of ‘Principal-Principal’ Conflicts," MPRA Paper 64541, University Library of Munich, Germany.
    10. Andrea Attar & Eloisa Campioni & Gwenael Piaser, 2011. "Information Revelation in Competing Mechanism Games," CEIS Research Paper 205, Tor Vergata University, CEIS, revised 04 Jul 2011.
    11. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2013. "Two-sided communication in competing mechanism games," Journal of Mathematical Economics, Elsevier, vol. 49(1), pages 62-70.
    12. Rishi Basak & Edwin van der Werf, 2019. "Accountability mechanisms in international climate change financing," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 19(3), pages 297-313, June.
    13. repec:ebl:ecbull:v:4:y:2005:i:11:p:1-6 is not listed on IDEAS
    14. Gwenaël Piaser, 2014. "Incentive compatible mechanisms in multiprincipal multiagent games," Working Papers 2014-49, Department of Research, Ipag Business School.
    15. Samir Wadhwa & Roy Dong, 2020. "Equilibrium Selection in Data Markets: Multiple-Principal, Multiple-Agent Problems with Non-Rivalrous Goods," Papers 2004.00196, arXiv.org, revised Mar 2023.

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    More about this item

    Keywords

    Moral hazard Multiple principals Multiple agents Simple mechanisms;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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