Delegation Principle for Multi-agency Games under Ex Post Equilibrium

Center for Applied Economics and Policy Research (CAEPR) Working Paper No. 2012-008

26 Pages Posted: 7 Dec 2012 Last revised: 7 Jun 2016

Yu Chen

Nanjing University - School of Economics

Date Written: June 6, 2016

Abstract

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."

Keywords: multi-agency, ex post equilibrium, mechanism design, menu design,delegation principle

JEL Classification: C79, D82, D86

Suggested Citation

Chen, Yu, Delegation Principle for Multi-agency Games under Ex Post Equilibrium (June 6, 2016). Center for Applied Economics and Policy Research (CAEPR) Working Paper No. 2012-008. Available at SSRN: https://ssrn.com/abstract=2186012 or http://dx.doi.org/10.2139/ssrn.2186012

Yu Chen (Contact Author)

Nanjing University - School of Economics ( email )

Nanjing, Jiangsu 210093
China
8625-83621970 (Phone)

HOME PAGE: http://nubs.nju.edu.cn/en/index.php

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