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.
Similar content being viewed by others
Author information
Authors and Affiliations
Additional information
Received: December 5, 1995; revised version August 18, 1996
Rights and permissions
About this article
Cite this article
Bond, E., Gresik, T. Competition between asymmetrically informed principals. Economic Theory 10, 227–240 (1997). https://doi.org/10.1007/s001990050155
Issue Date:
DOI: https://doi.org/10.1007/s001990050155