On selecting the right agent

Geoffroy de Clippel, Kfir Eliaz (), Daniel Fershtman () and Kareen Rozen ()
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Kfir Eliaz: Department of Economics, Tel-Aviv University and University of Utah
Daniel Fershtman: Department of Economics, Tel-Aviv University
Kareen Rozen: Department of Economics, Brown University

Theoretical Economics, 2021, vol. 16, issue 2

Abstract: Each period, a principal must assign one of two agents to a new task. Profit is stochastically higher when the agent is qualified for the task, but the principal cannot observe qualification. Her only decision is which of the two agents to assign, if any, given the public history of selections and profits, but she cannot commit to any rule. While she maximizes expected discounted profits, each agent maximizes his expected discounted selection probabilities. We fully characterize when the principal's first-best payoff is attainable in equilibrium, and identify a simple, belief-free, strategy profile achieving this first-best whenever feasible. Addionally, we provide a partial characterization of the case with many agents and discuss how our analysis extends to other variations of the game.

Keywords: Dynamic mechanism design without commitment; dynamic mechanism design without transfers (search for similar items in EconPapers)
JEL-codes: C73 D23 (search for similar items in EconPapers)
Date: 2021-05-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: On Selecting the Right Agent (2020)
Working Paper: On Selecting the Right Agent (2019)
Working Paper: On Selecting the Right Agent (2019)
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