Common Agency with Informed Principals: an Economics Lecture
- Date: 10/10/2006
David Martimort (IDEI (Institut d'Economie Industrielle), Toulouse)
University of British Columbia
The provision of public goods under asymmetric information has
generally been viewed as a mechanism design problem under the aegis of
an uninformed mediator. This paper focuses on institutional contexts
where no such mediator is available. Contributors privately informed on
their willingness to pay non-cooperatively offer contributions to an
agent who produces the public good on their behalf. This institutional
setting is thus viewed as a common agency game with privately informed
principals competing through contract offers. Instead of reducing their
marginal contributions to free-ride on others’ contributions,
principals do so to screen the agent’s endogenous information on what
he has learned from observing other principals’ offers. There may exist
multiple equilibria of such game, all of them being ex post
inefficient. The equilibrium correspondence and its properties are
studied in the case of small asymmetric information where equilibria
are interim-efficient. Beyond that case of a small asymmetric
information, equilibria may not be interimefficient.
PIMS Distinguished Lectures 2006
