The optimality of (stochastic) veto delegation

• 成果类型: Article
• 署名作者: Hu, Xiaoxiao; Lei, Haoran
• 署名单位: Ningbo University; Hunan University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2024.12.003
• 发表日期: 2025
• 页码: 215-234
• 关键词: Optimal delegation; Veto delegation; Stochastic mechanism

摘要

We analyze the optimal delegation problem between a principal and an agent, assuming that the latter has state-independent preferences. We demonstrate that if the principal is more risk-averse than the agent toward non-status quo options, an optimal mechanism is a veto mechanism. In a veto mechanism, the principal uses veto (i.e., maintaining the status quo) to balance the agent's incentives and does not randomize among non-status quo options. We characterize the optimal veto mechanism in a one-dimensional setting. In the solution, the principal uses veto only when the state surpasses a critical threshold.