TY - JOUR
T1 - Rivalry among agents seeking large budgets
AU - Terai, Kimiko
AU - Glazer, Amihai
N1 - Funding Information:
The authors wish to thank two anonymous referees for their helpful comments. We also greatly value the comments and discussions by Toshihiro Ihori, Yukihiro Nishimura, Kimiyoshi Kamada, and other participants at the 2016 Annual Meeting of the European Public Choice Society and the 2016 Spring Meeting of the Japanese Economic Association. The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Financial support from the Grants-in-Aid for Scientific Research (A) (24243042), the Grants-in-Aid for Scientific Research (B) (26285059, 26285065), and the Grants-in-Aid for Scientific Research (C) (26380370) from the Ministry of Education, Culture, Sports, Science, and Technology, Japan are gratefully acknowledged.
Funding Information:
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Financial support from the Grants-in-Aid for Scientific Research (A) (24243042), the Grants-in-Aid for Scientific Research (B) (26285059, 26285065), and the Grants-in-Aid for Scientific Research (C) (26380370) from the Ministry of Education, Culture, Sports, Science, and Technology, Japan are gratefully acknowledged.
Publisher Copyright:
© The Author(s) 2018.
PY - 2018/10/1
Y1 - 2018/10/1
N2 - 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.
AB - 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.
KW - Budget
KW - bureaucrats
KW - delegation
KW - hidden information
KW - reputation
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U2 - 10.1177/0951629818791029
DO - 10.1177/0951629818791029
M3 - Article
AN - SCOPUS:85052597715
VL - 30
SP - 388
EP - 409
JO - Journal of Theoretical Politics
JF - Journal of Theoretical Politics
SN - 0951-6298
IS - 4
ER -