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Menu Auctions and Influence Games with Private Information

We study games in which multiple principals influence the choice of a privately-informed agent by offering action-contingent payments. We characterize the equilibrium allocation set as the maximizers of an endogenous aggregate virtual-surplus program. The aggregate max- imand for every equilibrium includes an information-rent margin which captures the con- fluence of the principals’ rent-extraction motives. We illustrate the economic implications of this novel margin in two applications: a public goods game in which players incentivize a common public good supplier, and a lobbying game between conflicting interest groups who offer contributions to influence a common political decision-maker.

Authors: 
David Martimort, Paris School of Economics - EHESS
Lars Stole, University of Chicago
Publication Date: 
June, 2015
Publication Status: