Existence of equilibrium in common agency games with adverse selection

Guilherme Carmona, José Fajardo

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

Abstract

We establish the existence of subgame perfect equilibria in general menu games, known to be Sufficient to analyze common agency problems. Our main result states that every menu game satisfying enough continuity properties has a subgame perfect equilibrium. Despite the continuity assumptions that we make, discontinuities naturally arise due to the absence, in general, of continuous optimal choices for the agent. Our approach, then, is based on (and generalizes) the existence theorem of [Simon, L., Zame, W., 1990. Discontinuous games and endogenous sharing rules. Econometrica 58 (4), 861-872] designed for discontinuous games. (C) 2008 Elsevier Inc. All rights reserved.
Original languageEnglish
Pages (from-to)749-760
JournalGames And Economic Behavior
Volume66
Issue number2
DOIs
Publication statusPublished - 1 Jan 2009

Keywords

  • Common agency
  • Menu games
  • Subgame perfect equilibrium

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