English, Article, Journal or magazine article edition: Strategic delegation in experimental duopolies with endogenous incentive contracts Nikolaos Georgantzís; Constantine Manasakis; Evangelos Mitrokostas; ...

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Bookmark: http://trove.nla.gov.au/version/77012
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Strategic delegation in experimental duopolies with endogenous incentive contracts
Author
  • Nikolaos Georgantzís
  • Constantine Manasakis
  • Evangelos Mitrokostas
  • Emmanuel Petrakis
Physical Description
  • preprint
Notes
  • Often, deviations of firm behavior from profit maximization are the result of managerial incentive contracts. We study the endogenous emergence of incentive contracts used by firm owners to delegate the strategic decisions of the firm. These contracts are linear combinations either of own firm's profits and revenues, or own and rival firms' profits. A two- and three-stage game are studied depending on whether owners commit or not to a certain contract type before setting the managerial incentives and the level of output to produce in the market. We report experimental results which confirm some of the predictions of the model, especially those concerning owners' preference for relative performance incentives over profit-revenue contracts. Neglected behavioral aspects are proposed as possible explanation of some divergence between the theory and the experimental evidence, more specifically the relation between contract terms and managers' output choices
  • Experimental economics; Oligopoly theory; Managerial delegation; Endogenous contracts.
  • RePEc:crt:wpaper:0809
Language
  • English
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