Indirect Evolution Versus Strategic Delegation: A Comparison of Two Approaches to Explaining Economic Institutions
AbstractThe two major methods of explaining economic institutions, namely by strategic choices or by (indirect) evolution, are compared for the case of a homogenous quadratic duopoly market. Sellers either can provide incentives for their agents to care for sales (amounts) or evolve as sellers who care for sales in addition to profits. Whereas strategic delegation does not change the market results as compared to the usual duopoly solution, indirect evolution causes a more competitive behavior. Thus the case at hand suffices to demonstrate the difference between the two approaches in explaining economic institutions.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1997-12.
Date of creation: 1997
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noncooperative games; duopoly; organizational behavior;
Other versions of this item:
- Dufwenberg, Martin & Güth, Werner, 1998. "Indirect Evolution versus Strategic Delegation: A Comparison of Two Approaches to Explaining Economic Institutions," Working Paper Series 1998:9, Uppsala University, Department of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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