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On Competing Mechanisms under Exclusive Competition

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Abstract

We study games in which several principals design mechanisms in the presence of privately informed agents. Competition is exclusive: each type of each agent can participate with at most one principal and meaningfully communicate only with him. Economic models of exclusive competition restrict principals to use standard direct mechanisms, which induce truthful revelation of agents’ exogenous private information. This paper investigates the rationale for this restriction. We provide two results. First, we construct examples showing that direct mechanisms fail to completely characterize equilibrium outcomes even if we restrict to pure strategy equilibria. Second, we show that truth-telling strongly robust equilibrium outcomes survive against principals’ unilateral deviations toward arbitrary mechanisms.

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  • Andrea Attar & Eloisa Campioni & Gwenaël Piaser, 2018. "On Competing Mechanisms under Exclusive Competition," CEIS Research Paper 441, Tor Vergata University, CEIS, revised 09 Aug 2018.
    • Handle: RePEc:rtv:ceisrp:441
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    4. Han, Seungjin, 2022. "General competing mechanism games with strategy-proof punishment," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    5. Xie, Yimei & Ding, Chuan & Li, Yang & Wang, Kaihong, 2023. "Optimal incentive contract in continuous time with different behavior relationships between agents," International Review of Financial Analysis, Elsevier, vol. 86(C).

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    More about this item

    Keywords

    Competing Mechanisms; Exclusive Competition; Incomplete Information;
    All these keywords.

    JEL classification:

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

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