nep-cta New Economics Papers
on Contract Theory and Applications
Issue of 2016‒03‒17
three papers chosen by
Guillem Roig
University of Melbourne
  1. On public good provision mechanisms with dominant strategies and balanced budget By Christoph Kuzmics; Jan-Henrik Steg
  2. Designing Contracts for the Global Fund: Lessons from the Theory of Incentives - Working Paper 425 By Liam Wren-Lewis
  3. Incentive compatible mechanisms in multiprincipal multiagent games By Gwenaël Piaser
  1. By: Christoph Kuzmics (University of Graz); Jan-Henrik Steg (Bielefeld University)
    Abstract: Consider a mechanism for the binary public good provision problem that is dominant strategy incentive compatible (DSIC), ex-post individually rational (EPIR), and ex-post budget balanced (EPBB). Suppose this mechanism has the additional property that the utility from participating in the mechanism to the lowest types is zero for all agents. Such a mechanism must be of a threshold form, in which there is a fixed threshold for each agent such that the public good is not provided if there is an agent with a value below her threshold and is provided if all agents' values exceed their respective threshold. There are mechanism that are DSIC, EPIR, and EPBB that are not of the threshold form. Mechanisms that maximize welfare subject to DSIC, EPIR, and EPBB must again have the threshold form. Finally, mechanisms that are DSIC, EPIR, EPBB and that furthermore satisfy the condition that there is at least one type profile in which all agents can block the provision of the public good, also must be of the threshold form. As we allow individuals' values for the public good to be negative and positive, our results cover examples including bilateral trade, bilateral wage negotiations, a seller selling to a group of individuals (who then have joint ownership rights), and rezoning the use of land.
    Keywords: Public good provision; asymmetric information; dominant strategy
    JEL: C72 D82 H41
    Date: 2016–03
    URL: http://d.repec.org/n?u=RePEc:grz:wpaper:2016-03&r=cta
  2. By: Liam Wren-Lewis
    Abstract: This paper uses contract theory to suggest simple contract designs that could be used by the Global Fund. Using a basic model of procurement, we lay out five alternative options and consider when each is likely to be most appropriate. The rest of the paper then discusses how one can build a realworld contract from these theoretical foundations, and how these contracts should be adapted to different contexts when the basic assumptions do not hold. Finally, we provide a synthesis of these various results with the aim of guiding policy makers as to when and how ‘results-based’ incentive contracts can be used in practice.
    Keywords: Contracts, Global Fund, contract theory, theory of incentives.
    Date: 2016–02
    URL: http://d.repec.org/n?u=RePEc:cgd:wpaper:425&r=cta
  3. By: Gwenaël Piaser
    Date: 2016–02–18
    URL: http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-49&r=cta
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