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Economic Theory

, Volume 10, Issue 2, pp 227–240 | Cite as

Competition between asymmetrically informed principals

  • Eric W. Bond
  • Thomas A. Gresik

Summary.

This paper derives the set of equilibria for common agency games in which the principals compete in piece rates and lump sum payments and one principal has incomplete information about the agent's preferences. We show that the uninformed principal's expected payoff function is discontinuous with respect to the identity of the marginal agent type. This discontinuity is shown to support an open set of equilibria. For games in which the first-best equilibrium strategies are measurable with respect to the uninformed principal's information partition, this result implies the existence of an open set of Pareto inefficient equilibria.

JEL Classification Numbers: D82 C72. 

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Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • Eric W. Bond
    • 1
  • Thomas A. Gresik
    • 1
  1. 1.Department of Economics, The Pennsylvania State University, University Park, PA 16802, USAUS

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