Rivalry among agents seeking large budgets

Bibliographic Data

ID6298933
AuthorsKimiko Terai (0000-0002-3309-175X, Keio University, Tokyo, Japan, corresponding author), Amihai Glazer (0000-0002-3176-9694, University of California, Irvine)
Year2018
Volume30
Issue4
Pages388-409
Publication date2018-10-01
Open AccessYes
TypeARTICLE
VenueJournal of Theoretical Politics (JOURNAL)
Journal identifiersISSN: 0951-6298 • E-ISSN: 1460-3667
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/0951629818791029
OpenAlexW2885429045
LanguageEN
Citations received1
References cited26

An agent competing for resources from a principal may benefit from having the principal believe that the agent shares his preferences, whereas the principal may prefer that agents reveal their types, inducing a separating equilibrium. Such incentives are explored in a model with a principal who sets a budget in two separate periods, and two different agents allocate that budget among services. In the second period, the principal allocates a larger budget to the agent that he believes is more likely to share his preferences. In the first period, each agent may behave strategically, spending more on the service the principal prefers, thereby hiding the agent’s type; this benefits the principal in the current period, but hurts him in the future because he does not know which agent would spend in the way he prefers. The principal may induce separation by giving the agents a large budget in the initial period, or by hiding his preferences from them

Business · Computer security · Economics · Incentive · Microeconomics · Principal (computer security · Principal–agent problem · Rivalry · Banking stability, regulation, efficiency · Computer Science · Economic theories and models · Local Government Finance and Decentralization · Finance

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