Games played in a contracting environment

We analyze normal form games where a player has to pay a price to a supplier in order to play a specific action. Our focus is on supplier competition, arising from the fact that distinct suppliers supply different players, and possibly different actions of the same player. With private contracts, where a player only observes the prices quoted by his own suppliers, the set of equilibrium distributions over player actions coincides with the set of equilibrium distributions when all actions are supplied competitively, at cost. With public contracts, the two distributions differ dramatically even in simple games.     

Commitment and observability in a contracting environment

This paper examines leader-follower games where a leader must purchase an essential input from a price-setting supplier in order to take an action. We show that equilibrium outcomes when the followers perfectly observe the leaders' actions cannot be approximated by mixed equilibrium outcomes of the game where followers imperfectly observe the leaders' actions, i.e. they are not accessible. Accessibility fails since in a pure strategy equilibrium, a supplier makes positive profits; however in an equilibrium where a leader randomizes, supplier profits must be zero. Our result follows from a generalized indifference principle that mixed strategies must satisfy in economic environments. While supplier profits cannot be approximated, player action profiles are accessible. Our results also apply to games with costly observation.     

对外承包工程:"走出去"成绩卓著再进取力求突破

在上世纪70年代末伴随着改革开放而诞生的对外承包工程业务已经走过了二十多年的发展道路,虽然起步晚,起点低,但发展迅速。截止到2003年底,我国累计签订对外承包工程合同额达1324.5亿美元,完成营业额965.6亿美元。回顾对外承包工程迅速发展的过程有几个方面的特点:第一,1979年至1982年是起步阶段,1983至1989年为稳步发展阶段,完成营业额年均增长率接近30%,1990年至今,这项业务的发展进入了快速增长阶段,当年完成营业额由1990年的16.4亿美元增长到2003年的138.4亿美元,十余年间营业额增长了8.4倍。2003年,虽然受到SARS的干扰,但对外承包工…     

也门投资环境及工程承包市场探析

经济状况联合国计划发展署最近公布了2002年度世界各国经济发展情况报告，在被调查的173个国家中也门排第144位，属联合国确认的全球49个最不发达国家之一。1.国民经济现状也门自然资源匮乏，自然环境恶劣，经济发展水平较低。1990年5月南北也门实现统一，8月伊拉克入侵科威特，也门站在伊拉克一方，失去了海湾国家的经济援助，政府财政吃紧，国民收入大幅度下降。海湾战争期间有近一百万也门劳工从海湾国家返回也门，劳务收入大幅减少。1994年也门再次爆发内战，时间虽短，但是却造成了约100亿美元的经济损失，使也门经济雪上加霜，失业率…     

On partial contracting

This paper investigates contracting situations where giving away some control rights enhances both the donor's and the receiver's incentives to cooperate in the future. We define a partial contracting framework with nonverifiable actions for which either control is contractible (contractible control actions) or the right to transfer control ex post to another party is contractible (transferable control actions). Under incomplete information, when control over particular actions is transferable but not contractible, it can be optimal to give one party the right to transfer control over a particular action to the other party, in order for that party to build a reputation regarding her willingness to cooperate in the future.     

A folk theorem for repeated games played on a network

I consider repeated games on a network where players interact and communicate with their neighbors. At each stage, players choose actions and exchange private messages with their neighbors. The payoff of a player depends only on his own action and on the actions of his neighbors. At the end of each stage, a player is only informed of his payoff and of the messages he received from his neighbors. Payoffs are assumed to be sensitive to unilateral deviations. The main result is to establish a necessary and sufficient condition on the network for a Nash folk theorem to hold, for any such payoff function.     

Implicit contracting with a (potentially) reliable agent

Implicit contracts—informal agreements tied to observable, but non-verifiable information—play an important role in economic life. In this paper, we model such contracting in a two-period model with an agent that may be reliable, i.e., that always sticks to a promise he has previously made. We derive three main results: First, we show that a decrease in the discount factor may lead to a switch from a pooling equilibrium, where unreliable types mimic the reliable ones, to a separating one. Second, we find that a pooling equilibrium may yield a relatively lower surplus, because it puts a downward pressure on the effort that can be implemented. Combining both these results, we finally show that a decrease in the discount factor may be welfare-enhancing.      

Monitoring a common agent: Implications for financial contracting

Multiple principals want to obtain income from a privately informed agent and design their contracts non-cooperatively. The degree of coordination between principals shapes the contracts and affects the amount of monitoring. Equity-like contracts and excessive monitoring emerge when principals coordinate or verify each other's monitoring efforts. When this is not possible, free riding weakens monitoring incentives, so that flat payments, debt-like contracts, and very low levels of monitoring appear. Free riding may be so strong to induce even less monitoring than if the principals cooperated with each other; that is, non-cooperative monitoring does not necessarily lead to excessive monitoring.     

Information and experimentation in short-term contracting

Summary. The impact of information dissemination and experimentation on dynamic adverse selection in noisy agency relationships is examined. Significant deviations in terms of equilibrium actions and payments occur, when compared to deterministic environments. Information dissipates slowly, so payments to agents who stand to lose informational rents over time are lower than compared to deterministic settings. Moreover, the principal manipulates the agent's actions to affect the informativeness of the signal. Thus, the principal trades-off lower initial payments with higher informational rents later. Simultaneously, the principal manipulates the signal distribution to enhance his ability to learn about the agent's type. Received: February 15, 2000; revised version: August 29, 2000     

Optimality and renegotiation in dynamic contracting

We characterize the optimal renegotiation-proof contract in a dynamic principal–agent model in which the type of the agent may change stochastically over time. We show that, under general conditions, the optimal contract with commitment is renegotiation proof even when type realizations are serially correlated. When the renegotiation-proofness constraint is binding, it is always optimal to partially screen the types by offering a menu of choices to the agent; and the distortion induced by the renegotiation-proofness constraint is non-decreasing in the persistence of types.     

现场勘察:国际承包工程的关键环节

对国际工程而言,无论在项目投标阶段,还是在项目正式实施前期,现场勘察及市场调研都是十分关键的环节。与国内工程相比较,国际工程具有地域遥远、语言环境不同、交通通讯不便、文化习俗差异、项目所采用的规程规范不同等特点,若承包商不能很好地对工程现场和项目所在区域市场进     

Option contracting in the California water market

Temporary water transfers, as achievable under option contracts, capture gains from trade that would go unrealized if only permanent transfers of water rights were possible. This paper develops a bilateral option contracting model for water which includes the possibility of conveyance losses and random delivery. Seller-optimal and socially optimal option contracts are characterized in terms of relevant base and strike prices, as well as contract volumes, from an ex-ante and an ex-post point of view. Lastly, welfare gains are estimated, and actual contract prices in California are compared to model-predicted prices.     

Dynamic contracting with persistent shocks

In this paper, we develop continuous-time methods for solving dynamic principal-agent problems in which the agent's privately observed productivity shocks are persistent over time. We characterize the optimal contract as the solution to a system of ordinary differential equations and show that, under this contract, the agent's utility converges to its lower bound—immiserization occurs. Unlike under risk-neutrality, the wedge between the marginal rate of transformation and a low-productivity agent's marginal rate of substitution between consumption and leisure will not vanish permanently at her first high-productivity report; also, the wedge increases with the duration of a low-productivity report. We apply the methods to numerically solve the Mirrleesian dynamic taxation model, and find that the wedge is significantly larger than that in the independently and identically distributed (i.i.d.) shock case.     

Sequential contracting with multiple principals

This paper considers dynamic games in which multiple principals contract sequentially and non-cooperatively with the same agent. We first show that when contracting is private, i.e. when downstream principals do not observe the mechanisms offered upstream and the decisions taken in these mechanisms, all PBE outcomes can be characterized through pure-strategy profiles in which the principals offer menus of contracts and delegate to the agent the choice of the contractual terms. We then show that, in most cases of interest for applications, the characterization of the equilibrium outcomes is further facilitated by the fact that the principals can be restricted to offer incentive-compatible extended direct mechanisms in which the agent reports the endogenous payoff-relevant decisions contracted upstream in addition to his exogenous private information. Finally we show how the aforementioned results must be adjusted to accommodate alternative assumptions about the observability of upstream histories and/or the timing of contracting examined in the literature.     

Political contestability and public contracting

Do public agents undertake socially inefficient activities to protect themselves? In politically contestable markets, part of the lack of flexibility in the design and implementation of the public procurement process reflects public agents' risk adaptations to limit the political hazards from opportunistic third parties—political opponents, competitors, and interest groups. Reduced flexibility limits the likelihood of opportunistic challenges, while externalizing the associated adaptation costs to the public at large. We study this matter and provide a comprehensive theoretical framework with empirically testable predictions.     

Menu theorems for bilateral contracting

This paper studies bilateral contracting where multiple principals negotiate contracts with multiple agents independently. It is shown that pure-strategy equilibrium allocations relative to any ad hoc set of feasible mechanisms are supported by pure-strategy perfect Bayesian equilibria relative to the set of menus. This paper also shows that all equilibrium allocations to any ad hoc set of feasible mechanisms are supported by correlated equilibria relative to the set of menus, where a state is a probability distribution function over payoff-relevant variables. Furthermore, all equilibrium allocations relative to the set of menus persist even if principals use more complex mechanisms.     

Rent a womb: Surrogate selection,investment incentives and contracting

We develop a model of gestational surrogacy, in which a childless couple faces heterogeneous prospective surrogates. High-type surrogates add more value but also have higher outside options. Surrogates can make specific investments for the overall well-being (care) of the unborn child. We show that, under noncontractibility, surrogates invest less (take less care) than the first-best. Couples are also more likely to choose low-type surrogates, who need less compensation for foregoing cheaper outside options. Hence the popular practice of making surrogacy contracts unenforceable might put the unborn child at risk.     

Coordination and bargaining power in contracting with externalities

Building on Genicot and Ray [G. Genicot, D. Ray, Contracts and externalities: How things fall apart, J. Econ. Theory 131 (2006) 71-100] we develop a model of non-cooperative bargaining that combines the two main approaches in the literature of contracting with externalities: the offer game (in which the principal makes simultaneous offers to the agents) and the bidding game (in which the agents make simultaneous offers to the principal). Allowing for agent coordination, we show that the outcome of our bargaining procedure may differ remarkably from those of the offer and the bidding games. In particular, we find that bargaining can break agents' coordination and that the principal's payoff can be decreasing in his own bargaining power.