On the informed principal model with common values
In: The Rand journal of economics, Band 53, Heft 4, S. 792-825
ISSN: 1756-2171
AbstractIn the informed principal model with common values, I provide conditions that allow for the characterization of the set of equilibria of the game in which the principal makes a take‐it‐or‐leave‐it offer of a mechanism to the agent. I further examine if and when restriction to direct revelation mechanisms is without loss of generality. Last, I provide clear guidelines for solving economic applications, such as insurance, procurement, security design, and bilateral trading, of the informed principal model. The results are compared with and shown to significantly differ from those obtained in Maskin and Tirole (1992).