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Strategic Consensus

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Author Info
Aidt, T.S.
Dutta, J.

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Abstract

We study equilibrium retention rules in a dynamic common agency game. The decision to reappoint or not is made by a committee consisting of two principals: the retention decision is uncertain if the two principals disagree. We demonstrate that all equilibrium paths exhibit what we call strategic consensus: the agent takes actions that satisfy the performance standards of all principals on the one hand, and all principals lower their standards such that the agent wants to satisfy them on the other. This result applies both to economies with sub- and super-additive costs of providing utilities to the principals.

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Publisher Info
Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0403.

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Length: 22
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:cam:camdae:0403

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Related research
Keywords: Common agency; retention rules and uncertainty.;

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Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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  1. Aidt, T.S. & Dutta, J., 2008. "Electoral Uncertainty and Public Goods," Cambridge Working Papers in Economics 0843, Faculty of Economics, University of Cambridge. [Downloadable!]
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This page was last updated on 2009-11-16.


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