Strategic delegation in experimental markets

Arbeitspapier

In this experiment, we analyze strategic delegation in a Cournot duopoly. Owners can choose among two different contracts which determine their managers' salaries. One contract simply gives managers incentives to maximize firm profits, while the second contract gives an additional sales bonus. Although theory predicts the second contract to be chosen, it is only rarely chosen in the experimental markets. This behavior is rational given that managers do not play according to the subgame perfect equilibrium prediction when asymmetric contracts are given.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 373 Discussion Paper ; No. 2000,39

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Design of Experiments: Laboratory, Group Behavior ; Firm Behavior: Theory ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
• Subject: experimental economics ; strategic delegation ; managerial incentives

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Huck, Steffen ; Müller, Wieland ; Normann, Hans-Theo
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes
• (where): Berlin
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/62234
• URN: urn:nbn:de:kobv:11-10047484
• Last update: 10.03.2025, 11:41 AM CET