Delegation Using Forward Induction
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This paper explores how delegation can be used as a signal to sustain cooperation. I consider a static principal–agent model with two tasks, one resembling a coordination game. If there is asymmetric information about the agent’s type, the principal with high private belief can delegate the first task as a signal. This is also supported by the forward induction argument. However, in the laboratory setting, this equilibrium is chosen only sometimes. When the subjects have information about past sessions, there is a significant increase in the use of delegation. This finding sheds light on equilibrium selection in Bayesian games.
2017 ◽
Vol 102
(2)
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pp. 629-639
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2013 ◽
Vol 25
(2)
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pp. 185-201
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2014 ◽
Vol 6
(1)
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pp. 7-15
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1993 ◽
Vol 44
(2)
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pp. 193-198
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2021 ◽
pp. 101489
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