Abstract.
This paper studies a simple setting in which the contractual arrangements which determine the incentives for agents are not designed by a single central planner, but are themselves the outcome of a game among multiple noncooperatively acting principals. The notion of an Epsilon Contracting Equilibrium is introduced to predict the outcome of the contract-design game among principals. Symmetric pure strategy Epsilon Contracting Equlibria may not exist in perfectly symmetric environments. In a symmetric Epsilon Contracting Equilibrium in mixed strategies coordination failure may lead to a suboptimal institutional network in which the agents “cheat” their principals.
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Received: 14 June 1995 / Accepted: 09 August 1999
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Kerschbamer, R., Koray, S. Multiprincipals multiagents incentive design. Rev Econ Design 6, 5–40 (2001). https://doi.org/10.1007/PL00013693
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DOI: https://doi.org/10.1007/PL00013693