Abstract
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.
| Original language | English |
|---|---|
| Journal | Journal of Theoretical Politics |
| DOIs | |
| Publication status | Accepted/In press - 2018 Jan 1 |
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Keywords
- Budget
- bureaucrats
- delegation
- hidden information
- reputation
ASJC Scopus subject areas
- Sociology and Political Science
Cite this
Rivalry among agents seeking large budgets. / Terai, Kimiko; Glazer, Amihai.
In: Journal of Theoretical Politics, 01.01.2018.Research output: Contribution to journal › Article
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TY - JOUR
T1 - Rivalry among agents seeking large budgets
AU - Terai, Kimiko
AU - Glazer, Amihai
PY - 2018/1/1
Y1 - 2018/1/1
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
JO - Journal of Theoretical Politics
JF - Journal of Theoretical Politics
SN - 0951-6298
ER -