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Common agency and computational complexity: theory and experimental evidence

Kirchsteiger, G. and Prat, Andrea (1999) Common agency and computational complexity: theory and experimental evidence. . Center for Economic Research, Tilburg University, Tilburg, The Netherlands.

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In a common agency game, several principals try to in°uence the behavior of an agent. Common agency games typically have multiple equilibria. One class of equilibria, called truthful, has been identi¯ed by Bernheim and Whinston and has found widespread use in the political economy literature. In this paper we identify another class of equilibria, which we call natural. In a natural equilibrium, each principal o®ers a strictly positive contribution on at most one alternative. We show that a natural equilibrium always exists and that its computational complexity is much smaller than that of a truthful equilibrium. To compare the predictive power of the two concepts, we run an experiment on a common agency game for which the two equilibria predict a di®erent equilibrium alternative. The results strongly reject the truthful equilibrium. The alternative predicted by the natural equilibrium is chosen in 65% of the matches, while the one predicted by the truthful equilibrium is chosen in less than 5% of the matches.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 1999 the authors
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
Date Deposited: 02 Jun 2008 13:02
Last Modified: 27 Nov 2020 00:08

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