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on Contract Theory and Applications |
| By: | Seungjin Han; Siyang Xiong |
| Abstract: | In classical contract theory, we usually impose two assumptions: delegated contracts and perfect commitment. While the second assumption is demanding, the first one suffers no loss of generality. Following this tradition, current common-agency models impose delegated contracts and perfect commitment. We first show that non-delegated contracts expand the set of equilibrium outcomes under common agency. Furthermore, the powerful menu theorem for common agency (Peters (2001) and Martimort and Stole (2002)}) fails for either non-delegated contracts or imperfect commitment. We identify canonical contracts in such environments, and re-establish generalized menu theorems. Given imperfect commitment, our results for common-agency models are analogous to those in Bester and Strausz (2001) and Doval and Skreta (2012) for the classical contract theory, which re-establish the revelation principle. |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2309.11595&r=cta |
| By: | Estache, Antonio; Foucart, Renaud; Serebrisky, Tomás |
| Abstract: | We study the potential benefits of adding a lottery component to cut the main risks associated with standard negotiated and rule-based auction procurement procedures. We show that adopting a two stage approach in which bureaucrats first negotiate with a small number of bidders to assess their eligibility and, next, rely on a lottery to award the contract reduces corruption risks often observed in negotiated procedures. For rule-based procedures, we show that a “third-price lottery” in which the two highest bidders are selected with equal probability and the project is contracted at a price corresponding to the third highest bid can reduce limited liability, renegotiation, bid rigging and collusion risks. |
| Keywords: | rules;discretion;lotteries |
| JEL: | D44 D73 H57 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:12484&r=cta |