Showing papers by "Roland Strausz published in 2003"
TL;DR: In this article, the revelation principle does not hold for deterministic mechanisms, and with one agent, a revelation principle in terms of payoffs holds, but with more than one agent the result fails and direct mechanisms may by suboptimal.
34 citations
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TL;DR: In this article, the authors provide an analytical framework for principal-agent problems with adverse selection and limited commitment by allowing the principal to use noisy communication and derive the optimal contract by a similar procedure as in contracting problems with full commitment.
Abstract: Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004This paper provides an analytical framework for studying principal-agent problems with adverse selection and limited commitment. By allowing the principal to use noisy communication we solve two fundamental problems of contracting with imperfect commitment: First, we identify the relevant incentive constraints by showing that only ‘local’ constraints are binding if the agent’s preferences satisfy a single–crossing property. Second, we show that one can restrict the dimensionality of the message spaces of the communication device to the number of the agent’s types. As we illustrate in an example, these findings allow us to derive the optimal contract by a similar procedure as in contracting problems with full commitment.
1 citations