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Delegation principle for multi-agency games under ex post equilibrium

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  • We explore the strategic equivalence between the delegated menu contracting procedure and the centralized mechanism contracting procedure in general pure strategy multi-agency games under ex post equilibrium. We allow information externalities, contract externality, correlated types, and primitive constraints across the contracts for different agents. Our delegation principle identifies that even under this general setting ex post menu design is strategically equivalent to bilateral ex post mechanism design, which simplifies collective ex post mechanism design by ignoring relative information reference. Moreover, one can restrict attention to product menu design problems out of general menu design problems if the contract constraint sets have product structures. We provide conditions for when the principal can do strictly better by using the collective mechanism. Our results still hold if we include individual rationality or any degenerated form of our general model.

    Mathematics Subject Classification: Primary: 91A06, 91A80; Secondary: 91B44.

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