Andy ZAPECHELNYUK (University of St Andrews) – “Persuasion Meets Delegation”
There are two common ways for a principal to influence decision making of an agent. One is to manipulate the agent’s information (persuasion problem). Another is to limit the agent’s decisions (delegation problem). We show that, under practical assumptions, these two problems are equivalent; so solving one problem solves the other. We illustrate how the methods developed in the persuasion literature can be applied to address unsolved delegation problems by considering monopoly regulation with a participation constraint.
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