Collusion under asymmetric information. (English) Zbl 0891.90051
Summary: When applied to groups, the revelation principle postulates a Bayesian-Nash behavior between agents. Their binding agreements are unenforceable or the principal can prevent them at no cost. We analyze instead a mechanism design problem in which the agents can communicate between themselves and collude under asymmetric information. We characterize the set of implementable collusion-proof contracts both when the principal offers anonymous and nonanonymous contracts. After having isolated the nexi and the stakes of collusion we proceed to a normative analysis, perform some comparative statics, discuss our concept of collusion-proofness, and provide some insights about transaction costs in side contracting.
MSC:
91B64 | Macroeconomic theory (monetary models, models of taxation) |
91A40 | Other game-theoretic models |
91B14 | Social choice |