Open AccessOn selecting the right agent
Author(s) -
Clippel Geoffroy,
Eliaz Kfir,
Fershtman Daniel,
Rozen Kareen
Publication year - 2021
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te4027
Subject(s) - task (project management) , stochastic game , principal (computer security) , computer science , simple (philosophy) , function (biology) , mathematical economics , principal–agent problem , artificial intelligence , operations research , microeconomics , economics , mathematics , computer security , management , corporate governance , philosophy , epistemology , evolutionary biology , biology
Each period, a principal must assign one of two agents to a new task. Each agent privately learns whether he is qualified for the task. An agent wishes to be chosen independently of qualification and chooses whether to apply for the task. The principal wishes to appoint the most qualified agent and chooses which agent to assign as a function of the public history of profits. We fully characterize when the principal's first‐best payoff is attainable in equilibrium and identify a simple strategy profile achieving this first‐best whenever feasible. Additionally, we provide a partial characterization of the case with many agents and discuss how our analysis extends to other variations of the game.