Working Paper: CEPR ID: DP16807
Authors: Andrea Attar; Eloisa Campioni; Thomas Mariotti; Alessandro Pavan
Abstract: We study competing-mechanism games, in which several principals contract with several privately informed agents. We show that enabling principals to engage into private disclosures - whereby a principal sends to the agents contractible private signals about how her final decision will respond to the agents' messages - can significantly affect the predictions of such games. Our first result is that equilibrium outcomes and payoffs of games without private disclosures need no longer be supported once private disclosures are allowed for. This challenges the robustness of the folk theorems à la Yamashita (2010). Our second result is that allowing for private disclosures may generate equilibrium outcomes and payoffs that cannot be supported in any game without private disclosures, no matter how rich the message spaces are. This challenges the canonicity of the universal mechanisms of Epstein and Peters (1999). These findings call for a novel approach to the analysis of competing-mechanism games.
Keywords: Incomplete Information; Competing Mechanisms; Private Disclosures; Folk Theorems; Universal Mechanisms
JEL Codes: D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Private Disclosures (Y80) | Equilibrium Outcomes (D51) |
| Private Disclosures (Y80) | Payoffs (J33) |
| Equilibrium Outcomes (with Private Disclosures) (D82) | Equilibrium Outcomes (without Private Disclosures) (D82) |
| Private Disclosures (Y80) | Equilibrium Outcomes and Payoffs (D59) |
| Equilibrium Outcomes and Payoffs (with Private Disclosures) (D82) | Equilibrium Outcomes and Payoffs (without Private Disclosures) (C72) |
| Private Disclosures (Y80) | Robustness of Folk Theorem Results (C72) |