Abstract
We study two-player contests in which, in order to win a prize, each player hires a delegate to expend effort on her behalf; neither party's delegation contract is revealed to the rival party when the delegates choose their effort levels. We obtain first the outcomes of this unobservable-contracts case. Next, we perform comparative statics of these outcomes with respect to the higher-valuation player's valuation for the prize. Finally, we compare the outcomes of the unobservable-contracts case with those of the observable-contracts case. We find, among other things, that the unobservability of delegation contracts narrows the gap between the delegates' equilibrium contingent compensation.
JEL codes
- D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Reference
Kyung Hwan Baik, and Jihyun Kim, “Contests with Bilateral Delegation: Unobservable Contracts”, Journal of Institutional and Theoretical Economics, vol. 170, n. 3, September 2014, pp. 387–405.
See also
Published in
Journal of Institutional and Theoretical Economics, vol. 170, n. 3, September 2014, pp. 387–405