Indirect evolution vs. strategic delegation: a comparison of two approaches to explaining economic institutions
نویسندگان
چکیده
Two major methods of explaining economic institutions are compared for the case of a homogenous quadratic duopoly market. In the indirect evolutionary approach, sellers may evolve to care for sales, in addition to profit. In the strategic delegation approach, sellers may design incentives so that their agents care for sales. The two approaches model different phenomena, but both allow certain kinds of commitment. We investigate under what circumstances the two approaches lead to similar market outcomes. The results underscore the technical similarities as well as the conceptual differences between the two approaches. q 1999 Elsevier Science B.V. All rights reserved. JEL classification: C72; D21; D43
منابع مشابه
INDIRECT EVOLUTION VERSUS STRATEGIC DELEGATION: A Comparison of Two Approaches to Explaining Economic Institutions
The two major methods of explaining economic institutions, namely by strategic choices or by (indirect) evolution, are compared for the case of a homogenous quadratic duopoly market. Sellers either can provide incentives for their agents to care for sales (amounts) or evolve as sellers who care for sales in addition to profits. Whereas strategic delegation does not change the market results as ...
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