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A delegated agent in a winner-take-all contest

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  • Schoonbeek, Lambert

    (Groningen University)

Abstract

We consider a winner-take-all contest extended with a principal-agent re-lationship. One of the two players, say player 1, offers a contract to an agent to act in the contest as a delegate on his behalf. The wage offered to the agent is deliberately chosen by player 1. We characterize the Nash equilibrium of this contest and com-pare its properties with those of the Nash equilibrium of the corresponding standard contest in which both players compete themselves. We show that the expected utility of player 1 is larger in the contest with a delegate if he is strongly risk averse with respect to his money income and moreover the contested prize is large enough.

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File URL: http://irs.ub.rug.nl/ppn/188209212
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Bibliographic Info

Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 99B47.

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Date of creation: 1999
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Handle: RePEc:dgr:rugsom:99b47

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Cited by:
  1. Krakel, Matthias & Sliwka, Dirk, 2006. "Strategic delegation and mergers in oligopolistic contests," Journal of Economics and Business, Elsevier, vol. 58(2), pages 119-136.
  2. Schoonbeek, Lambert, 2002. "Delegation in a group-contest," Research Report 02F03, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  3. Lambert Schoonbeek, 2007. "Delegation with multiple instruments in a rent-seeking contest," Public Choice, Springer, vol. 131(3), pages 453-464, June.
  4. Gürtler, Oliver, 2006. "Contractual Incentive Provision and Commitment in Rent-Seeking Contests," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 100, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. Huck, Steffen & Konrad, Kai A. & Muller, Wieland, 2001. "Divisionalization in contests," Economics Letters, Elsevier, vol. 70(1), pages 89-93, January.
  6. Christian Rusche, 2011. "Does Delegation Help to Prevent Spiteful Behavior?," Ruhr Economic Papers 0270, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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