Events

Prof. LESTER T. CHAN
Assistant Professor
School of Economics & Gregory and Paula Chow Center for Economic Research
Xiamen University

This paper studies bilateral contracting between one principal and multiple agents.
Multiple equilibria arise due to agents’strategic interactions. In general, the principal’s
optimal contracting scheme varies with the choice of equilibrium selection criterion or
implementation requirement. Nevertheless, for a large class of models where agents’
payo¤s constitute a weighted potential game, I show that one contracting scheme is
optimal for a large class of equilibrium selection criteria and implementation require-
ments. This scheme ranks agents in ascending order of their weights in the weighted
potential game and induces them to accept their o¤ers in a dominance-solvable way,
starting from the …rst agent. With the general results, I derive robust predictions and
policy guidance for a wide variety of applications, including networks and pure/impure
public goods/bads.