Existence of equilibrium in common agency games with adverse selection. (English) Zbl 1165.91310
Summary: We establish the existence of subgame perfect equilibria in general menu games, known to be sufficient to analyze common agency problems. Our main result states that every menu game satisfying enough continuity properties has a subgame perfect equilibrium. Despite the continuity assumptions that we make, discontinuities naturally arise due to the absence, in general, of continuous optimal choices for the agent. Our approach, then, is based on (and generalizes) the existence theorem of L. K. Simon and W. R. Zame [Econometrica 58, No. 4, 861–872 (1990; Zbl 0729.90098)] designed for discontinuous games.
Citations:
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