Delegation Principle for Multi-agency Games under Ex Post Equilibrium
Nanjing University - School of Economics
June 6, 2016
Center for Applied Economics and Policy Research (CAEPR) Working Paper No. 2012-008
We explore the strategic equivalence of the delegated menu contracting procedure in pure-strategy multi-agency games under ex post equilibrium. Our model setup permits "full-blown interdependence," including information externality, contract externality, correlated types, and primitive constraints across the contracts for different agents. Our delegation principle identifies that (optimal) ex post menu design is strategically equivalent to (optimal) bilateral ex post mechanism design, which simplifies collective ex post mechanism design by ignoring relative information evaluation. Moreover, one can restrict attention to product menu design problems out of general menu design problems if the contract constraint sets have product structures. Our results still hold if we include individual rationality or any degenerated form of "full-blown interdependence."
Number of Pages in PDF File: 26
Keywords: multi-agency, ex post equilibrium, mechanism design, menu design,delegation principle
JEL Classification: C79, D82, D86
Date posted: December 7, 2012 ; Last revised: June 7, 2016
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