The author considers the problem of implementation when a principal hires many agents and is not able to monitor their actions. He distinguishes two cases: (1) when actions are mutually observable among agents; and (2) when actions are not observable. In (1), there is a mechanism in which th e first-best arises as a unique perfect equilibrium. In (2), there are typically multiple equilibria if the principal merely offers a set of optimal sharing rules. However, the author proves that the principal can use these optimal sharing rules as a starting point for a multistage mechanism that has a unique second-best perfect Bayesian e quilibrium. Copyright 1988 by The Review of Economic Studies Limited.

Anecdotal and experimental evidence suggests that bargaining sessions subject to deadlines often begin with cheap talk and rejected proposals. Agreements, if they are reached at all, tend to be concluded near the deadline. We attempt to capture and explain these phenomena in a strategic bargaining model that incorporates a bargaining deadline, the possibility of strategic delay, and a lack of perfect player control over the timing of offers. Imperfect player control is generated by an exogenous uniformly-distributed random delay in offer transmission. Our model has a symmetric Markov-perfect equilibrium, unique at almost all nodes, in which players adopt strategic delay early in the game, make and reject offers later on, and reach agreements late in the game if at all. In equilibrium players miss the deadline with positive probability. The expected division of the surplus is unique and close to an even split.

We derive optimal insurance for patients and payment method for physicians when neither the input decided by the patient (quantity of treatment) nor the input decided by the physician (effort) are contractible. The equilibrium in this third-best regime may sometimes be second best, in which both the physician input and the report of treatment are verifiable. Otherwise, truthful reporting forces a third best, characterized by provider "prospective payment" and suboptimal effort, while consumers' demand becomes excessive. We also analyze how "professional ethics" alters the equilibrium. Finally, collusive reporting mechanisms imply more stringent constraints, while competition among physicians relaxes them.