Direct Mechanisms, Menus and Latent Contracts
Gwenaёl Piaser
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DOI: 10.4236/me.2010.11005   PDF    HTML     2,986 Downloads   6,067 Views   Citations

Abstract

In common agency games, one cannot characterize all equilibria by considering only direct mechanisms. In an attempt to overcome this difficulty, Peters [1] and Martimort and Stole [2] identi?ed a class of indirect mechanisms (namely, menus) which are able to characterize every equilibrium. Unfortunately, menus are difficult to handle, and several methodologies have been proposed in the literature. Here, it is shown that, even if authors consider menus rather than simpler mechanisms, many equilibria described in the literature could have been characterized by direct incentive compatible mechanisms. Use of more sophisticated mechanisms was not necessary in these cases.

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G. Piaser, "Direct Mechanisms, Menus and Latent Contracts," Modern Economy, Vol. 1 No. 1, 2010, pp. 51-58. doi: 10.4236/me.2010.11005.

Conflicts of Interest

The authors declare no conflicts of interest.

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