Weight-Ranked Divide-and-Conquer Contracts

Lester Chan obtained his Ph.D. in Economics from Boston University in 2021. His fields of research are microeconomic theory and industrial organization, with a special interest in potential games, contract theory, and platforms. His current research focuses on overcoming the challenge of multiple equilibria in various principal(s)-agents problems. He will join Xiamen University as an assistant professor in Fall 2021.

I study 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 to the principal for a large class of equilibrium selection criteria and implementation requirements. This scheme ranks agents in ascending order of their weights in the weighted potential game and induces them to accept their offers in a dominance-solvable way, starting from the first agent. I apply the general results to networks and pure/impure public goods/bads.