Strategic Use of Delegation in Almost Strictly Competitive Games

Abstract

A social situation is problematic when the rivalrous players face the game characterized by competing behavior With bad outcomes. In this circumstances, players could not admit the equilibrium payoffs allocation and try to figure out the mechanisms which lead to efficiency by transforming the structure of the underlying game. This paper examines the benefit of strategic use of delegation in almost strictly competitive game considering two competing principal-agent pairs. The main result of this paper is that principals can realize Pareto efficient outcome in the convex hull of the feasible payoff allocation pairs when they delegate agents to play the game by proposing an incentive scheme in order to mitigate the competing structure of the original game strategically.