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Annalisa Vinella
''Bayesian-Nash vs dominant-strategy implementation with countervailing incentives: the two-type case''
( 2010, Vol. 30 No.1 )
We extend the principal/one-agent model with countervailing incentives to a framework in which the principal deals with two agents behaving non-cooperatively and protected by limited liability. Focusing on the two-type case, we show that, beside the situation in which first best is effected even without relying on type correlation, dominant-strategy implementation yields no penalty to the principal, with respect to Bayesian-Nash implementation, when the principal faces, on the opposite, very tight constraints.
Keywords: Countervailing incentives, Type correlation, Bayesian-Nash implementation, Dominant-strategy implementation
JEL: D8 - Information, Knowledge, and Uncertainty: General
Manuscript Received : Jan 06 2010 Manuscript Accepted : Mar 02 2010

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