Delegation Using Forward Induction

Swagata Bhattacharjee ()
Additional contact information
Swagata Bhattacharjee: Department of Economics, Ashoka University, Plot No. 2, Rajiv Gandhi Education City, Sonepat, Haryana 131029, India

International Game Theory Review (IGTR), 2022, vol. 24, issue 03, 1-33

Abstract: 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.

Keywords: Delegation; forward induction; lab experiment; information (search for similar items in EconPapers)
JEL-codes: C92 D23 D82 D86 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219198921500225
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:igtrxx:v:24:y:2022:i:03:n:s0219198921500225

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219198921500225

Access Statistics for this article

International Game Theory Review (IGTR) is currently edited by David W K Yeung

More articles in International Game Theory Review (IGTR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().