Common agency games: Indifference and separable preferences

This paper examines the role of direct mechanisms in common agency games. We focus on deterministic contracts and show how the introduction of a separability condition on the preferences of the agent is sufficient for the Revelation Principle to hold when finite games with generic payoffs are considered. The result goes through without imposing any restriction on the principals’ payoffs. This provides a rationale for the restriction to direct mechanisms even when competition among principals is considered.