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Strategic delegation in an experimental mixed duopoly

Author

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  • Du, Ninghua
  • Heywood, John S.
  • Ye, Guangliang

Abstract

We provide the first experimental test of the consequences of delegation in a mixed duopoly. Such delegation allows a profit maximizing private owner and a welfare maximizing public owner to weight sales in managerial contracts. Theory predicts that such contracts improve welfare. Our evidence indicates that both public and private subject owners do provide a weight on sales consistent with the subgame perfect equilibrium. Critically, however, this emerges in the experiment only when playing with a robot manager and when playing with a human subject manager after the experience of playing with a robot manager.

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  • Du, Ninghua & Heywood, John S. & Ye, Guangliang, 2013. "Strategic delegation in an experimental mixed duopoly," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 91-100.
    • Handle: RePEc:eee:jeborg:v:87:y:2013:i:c:p:91-100
    DOI: 10.1016/j.jebo.2013.01.006
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    Cited by:

    1. Toshihiro Matsumura & Yoshihiro Tomaru, 2015. "Mixed duopoly, location choice, and shadow cost of public funds," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 416-429, October.
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    3. Guangliang Ye & Jinhua Zhao, 2016. "Environmental Regulation in a Mixed Economy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 273-295, September.
    4. Barreda-Tarrazona, Iván & Georgantzís, Nikolaos & Manasakis, Constantine & Mitrokostas, Evangelos & Petrakis, Emmanuel, 2016. "Endogenous managerial compensation contracts in experimental quantity-setting duopolies," Economic Modelling, Elsevier, vol. 54(C), pages 205-217.
    5. Shaohua Han & John S. Heywood & Guangliang Ye, 2017. "Informative Advertising in a Mixed Oligopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(1), pages 103-125, August.
    6. John S. Heywood & Zerong Wang & Guangliang Ye, 2022. "Strategic delegation in an international mixed oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1888-1898, September.
    7. Christoph March, 2019. "The Behavioral Economics of Artificial Intelligence: Lessons from Experiments with Computer Players," CESifo Working Paper Series 7926, CESifo.
    8. Jie Shuai, 2017. "Mixed Duopoly with a Partial-Delegated-Public Firm," Manchester School, University of Manchester, vol. 85(3), pages 339-356, June.
    9. March, Christoph, 2021. "Strategic interactions between humans and artificial intelligence: Lessons from experiments with computer players," Journal of Economic Psychology, Elsevier, vol. 87(C).
    10. HIGASHIDA Keisaku, 2018. "Subsidies to Public Firms and Competition Modes under a Mixed Duopoly," Discussion papers 18001, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Mixed duopoly; Incentive contract; Experiment markets;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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