Markov Perfect Equilibrium in Multi-period Games between Sponsor and Bureau

Fredrik Carlsen and Kjetil Haugen

Public Choice, 1994, vol. 79, issue 3-4, 257-80

Abstract: The authors formulate a simple model of the interaction between a sponsor and a bureau. The sponsor sets the bureau's budget while the bureau decides on how much to spend on slack. The authors compute numerically Markov perfect equilibria of multiperiod games where the agents move alternately and apply Markov strategies. Both agents are worse-off compared to the one-period game with simultaneous moves. As the discount factors increase, the equilibrium outcome becomes less cooperative in nature. Copyright 1994 by Kluwer Academic Publishers

Date: 1994
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