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Definable and contractible contracts

Peters, Michael and Szentes, Balázs (2012) Definable and contractible contracts. Econometrica, 80 (1). pp. 363-411. ISSN 0012-9682

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Abstract

This paper analyzes Bayesian normal form games in which players write contracts that condition their actions on the contracts of other players. These contracts are required to be representable in a formal language. This is accomplished by constructing contracts which are definable functions of the Godel code of every other player's contract. We provide a complete characterization of the set of allocations supportable as pure-strategy Bayesian equilibria of this contracting game. When information is complete, this characterization provides a folk theorem. In general, the set of supportable allocations is smaller than the set supportable by a centralized mechanism designer.

Item Type: Article
Official URL: http://www.blackwellpublishing.com/journal.asp?ref...
Additional Information: © 2012 The Econometric Society.
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Journal of Economic Literature Classification System: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C11 - Bayesian Analysis
Sets: Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 23 Feb 2012 15:49
URL: http://eprints.lse.ac.uk/41983/

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