On Selecting the Right Agent

65 Pages Posted: 2 Aug 2019

See all articles by Kareen Rozen

Kareen Rozen

Brown University - Department of Economics

Kfir Eliaz

Tel Aviv University

Geoffroy de Clippel

Brown University

Daniel Fershtman

Tel Aviv University - Eitan Berglas School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2019

Abstract

Each period, a principal must assign one of two agents to some task. Profit is stochastically higher when the agent is qualified for the task. The principal cannot observe qualification. Her only decision is which of the two agents to assign, if any, given the public history of selections and profits. She cannot commit to any rule. While she maximizes expected discounted profits, each agent maximizes his expected discounted selection probabilities. 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. We propose a new refinement for dynamic mechanisms (without transfers) where the designer is a player, under which we show the principal's next-best, when the first-best is unachievable, is the one-shot Nash. We show how our analysis extends to variations on the game accommodating more agents, caring about one's own performance, cheap talk and losses.

Keywords: dynamic allocation, mechanism design without commitment, mechanism design without transfers

Suggested Citation

Rozen, Kareen and Eliaz, Kfir and de Clippel, Geoffroy and Fershtman, Daniel, On Selecting the Right Agent (July 2019). CEPR Discussion Paper No. DP13891. Available at SSRN: https://ssrn.com/abstract=3428415

Kareen Rozen

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Kfir Eliaz

Tel Aviv University ( email )

Ramat Aviv
Tel-Aviv, 6997801
Israel

Daniel Fershtman

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

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