Information Revelation in Competing Mechanism Games

Abstract

We consider multiple-principal multiple-agent games of incomplete information. In this context, we identify a class of direct and incentive compatible mechanisms: each principal privately recommends to each agent to reveal her private information to the other principals, and each agent behaves truthfully. We show that there is a rationale in restricting attention to this class of mechanisms: if all principals make use of direct incentive compatible mechanisms, there are no incentives to unilaterally deviate towards more sophisticated mechanisms. We develop two examples to show that private recommendations are a key element of our construction, and that the restriction to direct incentive compatible mechanisms is not sufficient to provide a complete characterization of equilibria.