Common Agency with Informed Principals: Menus and Signals

In this paper I consider games in which multiple informed principals simultaneously compete to influence the decisions of a common agent. I focus on the problem of characterizing the equilibrium outcomes of such games. I first show that, to solve this problem, one can invoke neither Myerson’s Inscrutability Principle, which holds in agency games with one informed principal, nor the Extended Taxation Principle, which holds in common-agency games with uninformed principals. I then provide two characterizations of the equilibrium outcomes: one for games in which the principals delegate the final decisions to the agent, and one for games in which they participate with the agent in making such decisions. JEL Classification Numbers: C72, D82, D83, D86