Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162771
Authors: 
Ensthaler, Ludwig
Huck, Steffen
Leutgeb, Johannes
Year of Publication: 
2017
Series/Report no.: 
WZB Discussion Paper SP II 2016-305r
Abstract: 
From the regulation of sports to lawmaking in parliament, in many situations one group of people ("agents") make decisions that affect payoffs of others ("principals") who may offer action-contingent transfers in order to sway the agents' decisions. Prat and Rustichini (2003) characterize pure-strategy equilibria of such Games Played Through Agents. Specifically, they predict the equilibrium outcome in pure strategies to be efficient. We test the theory in a series of experimental treatments with human principals and computerized agents. The theory predicts remarkably well which actions, and outcomes are implemented but subjects' transfer offers deviate systematically from equilibrium. We show how quantal response equilibrium accounts for the deviations and test its predictions out of sample. Our results show that quantal response equilibrium is particularly well suited for explaining behavior in such games.
Subjects: 
games played through agents
experiment
quantal response equilibrium
JEL: 
D44
C91
D72
D83
Document Type: 
Working Paper

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