We study competing mechanism games in which principals simultaneously design contracts to deal with several agents. We show that principals can profit from privately communicating with agents by generating incomplete information in the continuation game they play. Specifically, we construct an example of a complete information game in which none of the (multiple) equilibria in Yamashita (2010) survives against unilateral deviations to mechanisms involving private communication. This also contrasts with the robustness result established by Han (2007). The role of private communication we document may call for extending the standard construction of Epstein and Peters (1999) to incorporate this additional element.
Andrea Attar, Eloisa Campioni, and Gwenaël Piaser, “Private Communication in Competing Mechanism Games”, Journal of Economic Theory, vol. 183, September 2019, pp. 258–283.
Andrea Attar, Eloisa Campioni, and Gwenaël Piaser, “On Private Communication in Competing Mechanism Games”, TSE Working Paper, n. 17-863, November 2017.
TSE Working Paper, n. 17-863, November 2017