Mixed Strategies in Combinatorial Agency

We study a setting where a principal needs to motivate a team of agents whose combination of hidden efforts stochastically determines an outcome. In a companion paper we devise and study a basic “combinatorial agency” model for this setting, where the principal is restricted to inducing a pure Nash equilibrium. Here, we show that the principal may possibly gain from inducing a mixed equilibrium, but this gain can be bounded for various families of technologies (in particular if a technology has symmetric combinatorial structure). In addition, we present a sufficient condition under which mixed strategies yield no gain to the principal.

comb-agency-mixed-full.pdf
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In  Internet and Network Economics (WINE'06)

Details

TypeInproceedings
URLhttp://www.springerlink.com/content/f52t5835w6584835/
Pages353-364
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