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Sequential communication with ex post participation constraints

Authors
Journal
Journal of Economic Theory
0022-0531
Publisher
Elsevier
Publication Date
Volume
137
Issue
1
Identifiers
DOI: 10.1016/j.jet.2007.01.001
Keywords
  • Asymmetric Information
  • Principal–Agent
  • Implementation
  • Contract Theory
Disciplines
  • Communication

Abstract

Abstract This paper examines an informed principal–agent game with ex post participation constraints for the agent. It shows that the players do not lose by communicating in turn among themselves rather than simultaneously if and only if the principal communicates first. It then considers every Bayesian incentive compatible allocation rules that assign non-negative payoffs for one player in a bilateral asymmetric information framework. It provides necessary and sufficient conditions for sequential communication to be as efficient as simultaneous communication in implementing these allocation rules when the player with unbounded payoffs moves first.

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