Optimal sequential delegation

Daniel Krähmer and Eugen Kovac

Journal of Economic Theory, 2016, vol. 163, issue C, 849-888

Abstract: The paper extends the optimal delegation framework to a dynamic environment where the agent initially has private information merely about the distribution of the state and learns the true state only as the relation proceeds. The principal may want to elicit the agent's initial information and offers a menu of delegation sets where the agent first chooses a delegation set and subsequently an action within this set. We characterize environments under which it is optimal and under which it is not optimal to elicit the agent's initial information and characterize optimal delegation menus. In the former case, delegation sets may be disconnected and may feature gaps.

Keywords: Optimal delegation; Sequential screening; Dynamic mechanism design; Non-transferable utility (search for similar items in EconPapers)
JEL-codes: D02 D20 D82 D86 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:163:y:2016:i:c:p:849-888

DOI: 10.1016/j.jet.2016.03.009

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