Full Discretion is Inevitable

This article studies a dynamic project‐selection game between a Principal and an Agent with conflicting interests. Only the Agent knows what projects are feasible. In each period before a project is selected, the Principal imposes a restriction set. The Agent can select any feasible project within this set, thereby ending the game. The Agent can also stay silent, in which case the game will proceed to the next period. Importantly, the Principal cannot commit to her future restriction sets. I show that when the Agent is sufficiently patient, the Principal fully delegates to the Agent in the unique equilibrium.