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In this note, we investigate if the standard result by the managerial delegation literature, i.e., the sub‐game perfect Nash equilibrium is not Pareto‐optimal from the firms' viewpoint, still applies when… Click to show full abstract
In this note, we investigate if the standard result by the managerial delegation literature, i.e., the sub‐game perfect Nash equilibrium is not Pareto‐optimal from the firms' viewpoint, still applies when asymmetric and convex costs are introduced into the analysis. In such a framework, the managerial delegation choice still represents a sub‐game Nash perfect equilibrium, but the more efficient firm may obtain higher profits provided that the degree of cost asymmetry between firms is sufficiently large. Copyright © 2015 John Wiley & Sons, Ltd.
Journal Title: Managerial and Decision Economics
Year Published: 2017
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