Strategic delegation in experimental markets

Steffen Huck, Wieland Müller and Hans-Theo Normann

No 2000,39, SFB 373 Discussion Papers from Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes

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: experimental economics; strategic delegation; managerial incentives (search for similar items in EconPapers)
JEL-codes: C72 C92 D21 D43 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (3)

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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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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb373:200039

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