Contractual Externalities and Common Agency Equilibria (original) (raw)

Abstract: We analyze the set of payos,achieved at truthful equilibria of a dele- gated common,agency game under complete information and the set of equilibrium payos,achieved with dierentiable,contributions for the same game under asym- metric information. Those sets depends on how equilibrium contribution schedules are extended o,the equilibrium. We show that, as the asymmetric information shrinks to zero, the set of equilibrium payo under asymmetric information may converge or not towards the set of payos,achieved at truthful equilibria. We show that this convergence fails if the contributions are extended in a natural way o,the equilibrium outputs. This casts some doubt on focusing on the whole set of truthful equilibria under complete information. We thank Etienne Bilette de Villemeur, Michel Lebreton, Humberto Moreira, Aggei Semenov and