Information Revelation in Competing Mechanism Games

Résumé

We consider multiple-principal multiple-agent games of incomplete information. In this context, we show that restricting principals to propose truth-telling direct mechanisms is problematic: the best reply of a single principal to a given array of offers proposed by his rivals cannot always be represented through truth-telling mechanisms. We then show that if contracts are exclusive, truth-telling direct mechanisms are able to characterize best replies. This provides a rationale for the use of truth-telling direct mechanisms in the situation in which each agent can contract with at most one principal, that has been postulated in most economic applications.