| dc.description |
Much analysis has been recently devoted in the contract literature to economies in
which each agent observes a signal about other agents' private information. This
toghether with correlation among agents' outputs may be used to design information
extraction mechanisms. In some cases it can be shown that the optimal contract
implements full information extraction, and hence the incentive constrained optimum
coincides with the Pareto optimum. We study the robustness of information extraction mechanism with respect to economies in which `exclusive' contracts cannot be implemented. By this we mean situations in which a `principal' or a financial intermediary cannot observe, monitor or
contract upon all the contractual relationships an agent may enter with other intermediaries or agents. This is a very plausible situation if we think of informal or implicit contracts that are not in general publicly observable. In a previous paper (Bisin and Guaitoli 1998) we analyzed equilibria with moral hazard and financial intermediaries competing in a `non-exclusivity' environment, showing that equilibria are never second best efficient and very often fail to implement the optimal action. It is interesting to
ask, therefore, whether information extraction in groups of agents may overcome the serious inefficiency generated by non-exclusivity. |
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