Strategic consensus
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Authors
Aidt, Toke S
Dutta, Jayasri
Publication Date
2004-06Series
Cambridge Working Papers in Economics
Publisher
Faculty of Economics
Language
en_GB
Type
Working Paper
Metadata
Show full item recordCitation
Aidt, T. S., & Dutta, J. (2004). Strategic consensus. https://doi.org/10.17863/CAM.5006
Abstract
We study equilibrium retention rules in a dynamic common agency game. The decision to reappoint or not is made by a committee consisting of two principals: the retention decision is uncertain if the two principals disagree. We demonstrate that all equilibrium paths exhibit what we call strategic consensus: the agent takes actions that satisfy the performance standards of all principals on the one hand, and all principals lower their standards such that the agent wants to satisfy them on the other. This result applies both to economies with sub- and super-additive costs of providing utilities to the principals.
Keywords
Classification-JEL: C7, D80, M52, Common agency, retention rules and uncertainty.
Identifiers
External DOI: https://doi.org/10.17863/CAM.5006
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