A note on interval delegation
Kyle Bagwell and
Alex Frankel ()
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Manuel Amador: University of Minnesota
Alex Frankel: University of Chicago
Economic Theory Bulletin, 2018, vol. 6, issue 2, 239-249
Abstract In this note we extend the Amador and Bagwell (Econometrica 81:1541–1599, 2013) conditions for confirming the optimality of a proposed interval delegation set to the possibility of degenerate intervals, in which the agent takes the same action at every state. We consider the cases of money burning as well as no money burning. These results allow us to provide new sufficient conditions on utility functions and state distributions to guarantee that some interval—degenerate or non-degenerate—will be optimal.
Keywords: Delegation; Optimal contracting; Tariff caps (search for similar items in EconPapers)
JEL-codes: D82 F10 (search for similar items in EconPapers)
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