August 11, 2025Open Access

Weight‐ranked divide‐and‐conquer contracts

LCLester T. ChanSouthern University of Science and Technology

Key Points

A weighted potential game leads to multiple equilibria in multi-agent contracting situations, influencing strategic decisions.
The optimal contracting scheme ranks agents by their weights, ensuring effective offer acceptance through dominance-solvable methods.
Characterization includes various applications, notably in public goods dynamics and binary-action scenarios, enhancing real-world compatibility.
Understanding these contracts may improve outcomes in settings with competing agents and complex interactions, impacting economic behavior.

Abstract

This paper studies a large class of multi‐agent contracting models with the property that agents' payoffs constitute a weighted potential game. Multiple equilibria arise due to agents' strategic interactions. I fully characterize a contracting scheme that is optimal for the principal for all equilibrium selection criteria that are more pessimistic than potential maximization. This scheme ranks agents in ascending order of their weights in the weighted potential game and then induces them to accept their offers in a dominance‐solvable way, starting from the first agent. I apply the general results to networks, public goods/“bads,” and a class of binary‐action applications.

AIに質問

Bookmark

View Full Paper