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Strategic delegation in Nash bargaining
Bargainers can increase their outcome by delegation. This paper analyzes delegation contracts consisting of two components: First, a percentage of the outcome if the delegate concludes an agreement. Second, a bonus payment if the delegate fails to do so. This paper derives the effects of these compo...
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Published in: | Managerial and decision economics 2024-03, Vol.45 (2), p.784-794 |
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container_title | Managerial and decision economics |
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creator | Kirstein, Roland |
description | Bargainers can increase their outcome by delegation. This paper analyzes delegation contracts consisting of two components: First, a percentage of the outcome if the delegate concludes an agreement. Second, a bonus payment if the delegate fails to do so. This paper derives the effects of these components on the principal's payoff and shows that the optimal contract is unique. Optimally, the principal offers a small share and a high reward for failure to reach an agreement. Delegate's bargaining skills play no role in the optimal contract. The condition is derived under which the optimal contract benefits the principal. |
doi_str_mv | 10.1002/mde.4033 |
format | article |
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source | International Bibliography of the Social Sciences (IBSS); Wiley |
subjects | Bargaining Contracts Delegation |
title | Strategic delegation in Nash bargaining |
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