The Revelation and Delegation Principles in Common Agency Games

Abstract

In the context of common agency adverse-selection games weillustrate that the revelation principle cannot be applied to studyequilibria of the multi-principal games. We then demonstrate thatan extension of the taxation principle – what we term the“delegation principle” – can be used to characterize the set of allcommon agency equilibria.revelation principle, delegation principle, taxationprinciple, common agency, adverse selection.