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

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  • Attar, Andrea
  • Campioni, Eloisa
  • Mariotti, Thomas
  • Pavan, Alessandro

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.

Suggested Citation

  • Attar, Andrea & Campioni, Eloisa & Mariotti, Thomas & Pavan, Alessandro, 2021. "Keeping the Agents in the Dark: Private Disclosures in Competing Mechanisms," TSE Working Papers 21-1227, Toulouse School of Economics (TSE), revised Dec 2023.
    • Handle: RePEc:tse:wpaper:125751
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    References listed on IDEAS

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    1. Attar, Andrea & Campioni, Eloisa & Mariotti, Thomas & Piaser, Gwenaël, 2021. "Competing mechanisms and folk theorems: Two examples," Games and Economic Behavior, Elsevier, vol. 125(C), pages 79-93.
    2. Peters, Michael, 2001. "Common Agency and the Revelation Principle," Econometrica, Econometric Society, vol. 69(5), pages 1349-1372, September.
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    5. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
    6. Pavan, Alessandro & Calzolari, Giacomo, 2009. "Sequential contracting with multiple principals," Journal of Economic Theory, Elsevier, vol. 144(2), pages 503-531, March.
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    10. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2019. "Private communication in competing mechanism games," Journal of Economic Theory, Elsevier, vol. 183(C), pages 258-283.
    11. Andrea Prat & Aldo Rustichini, 2003. "Games Played Through Agents," Econometrica, Econometric Society, vol. 71(4), pages 989-1026, July.
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    16. Szentes, Balázs, 2015. "Contractible contracts in common agency problems," LSE Research Online Documents on Economics 66071, London School of Economics and Political Science, LSE Library.
    17. Peters, Michael & Troncoso-Valverde, Cristián, 2013. "A folk theorem for competing mechanisms," Journal of Economic Theory, Elsevier, vol. 148(3), pages 953-973.
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    More about this item

    Keywords

    Incomplete Information; Competing Mechanisms; Private Disclosures; Signals; Universal Mechanisms; Folk Theorems;
    All these keywords.

    JEL classification:

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

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