Choosing the agent's group identity in a trust game with delegated decision making | Zendy

Zimper Alexander | Zendy; Nicholls Nicky | Zendy

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Choosing the agent's group identity in a trust game with delegated decision making

Author(s) -

Zimper Alexander,

Nicholls Nicky

Publication year - 2020

Publication title -

journal of public economic theory

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.809

H-Index - 32

eISSN - 1467-9779

pISSN - 1097-3923

DOI - 10.1111/jpet.12405

Subject(s) - identity (music) , principal (computer security) , group (periodic table) , microeconomics , construct (python library) , collective identity , nash equilibrium , subgame , economics , group decision making , subgame perfect equilibrium , principal–agent problem , dictator game , social identity theory , signaling game , social psychology , mathematical economics , social group , psychology , computer science , political science , best response , law , computer security , finance , chemistry , epsilon equilibrium , acoustics , corporate governance , programming language , physics , organic chemistry , politics

Members of a given social group often favor members of their own group identity over people with different group identities. We construct a trust game in which the principal delegates the decision about an investment into a receiver to an agent who either favors the principal's or the receiver's group identity. When choosing the agent's group identity the principal faces a trade‐off between a loyal agent and an agent who might increase the receiver's willingness to cooperate. We solve for the principal's decision in a subgame‐perfect nash equilibrium for the two scenarios of a risk‐neutral and risk‐averse agent, respectively.

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