Strategic Delegation in Experimental Markets

Steffen Huck (), Wieland Müller and Hans-Theo Norman

No 290, CESifo Working Paper Series from CESifo Group Munich

Abstract: 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.

Keywords: Strategic delegation; managerial incentives; experimental economics (search for similar items in EconPapers)
Date: 2000
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Related works:
Journal Article: Strategic delegation in experimental markets (2004)
Working Paper: Strategic delegation in experimental markets (2004)
Working Paper: Strategic delegation in experimental markets (2000)
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