Principal-Agent Negotiations with Teams of Agents: Experimental Evidence

56 Pages Posted: 18 Aug 2005 Last revised: 4 Aug 2015

Andrew B. Whitford

University of Georgia - Department of Public Administration and Policy

Date Written: 2006

Abstract

We examine how a principal implements a joint forcing contract for a team of two agents, whose joint product determines the value of the principal's asset. We focus on the "agents' problem": whether to contribute to a public good when one's costly contribution is unobservable. Our experiments show that agents provide higher levels of effort than predicted given the principal's imposed contract. While principals governing teams of agents sometimes do use incentives, in cases where incentives are not present - if agents trust one another - they are each more likely to contribute high effort.

Keywords: Principal agency, teams, experiments, trust

JEL Classification: M54, C92, D23, H41, J3

Suggested Citation

Whitford, Andrew B., Principal-Agent Negotiations with Teams of Agents: Experimental Evidence (2006). Available at SSRN: https://ssrn.com/abstract=782728 or http://dx.doi.org/10.2139/ssrn.782728

Andrew B. Whitford (Contact Author)

University of Georgia - Department of Public Administration and Policy ( email )

Athens, GA 30602
United States
706-542-2898 (Phone)
706-583-0610 (Fax)

HOME PAGE: http://andrewwhitford.com

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