Affiliation:
1. Technion – Israel Institute of Technology, Haifa 3200003, Israel;
2. University of Bath, Bath BA2 7AY, United Kingdom;
3. Keele University, Newcastle ST5 5BG, United Kingdom
Abstract
The “common agency” model, introduced by Bernheim and Whinston in 1986 combines the fundamental challenge of the principal–agent model with the challenges of coordinating multiple principals. In “Incomplete information VCG contracts for common agency,” Alon, Talgam-Cohen, Lavi, and Shamash show that the class of common agency settings for which there exists a contract that guarantees truthfulness of all principals, welfare maximization, and the two standard properties from contract theory—limited liability for the agent and individual rationality for the principals—is identifiable by a polynomial-time algorithm. Furthermore, for these settings, the authors design a polynomial-time computable contract: given valuation reports from the principals, it returns, if possible for the setting, a payment scheme for the agent that constitutes a contract with all desired properties.
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Subject
Management Science and Operations Research,Computer Science Applications