Choosing the agent's group identity in a trust game with delegated decision making
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Date
Authors
Zimper, Alexander
Nicholls, Nicky
Journal Title
Journal ISSN
Volume Title
Publisher
Wiley
Abstract
Members of a given social group often favor members of their own group identity over people with different group identities. We construct a trust game in which the principal delegates the decision about an investment into a receiver to an agent who either favors the principal's or the receiver's group identity. When choosing the agent's group identity the principal faces a trade‐off between a loyal agent and an agent who might increase the receiver's willingness to cooperate. We solve for the principal's decision in a subgame‐perfect nash equilibrium for the two scenarios of a risk‐neutral and risk‐averse agent, respectively.
Description
Keywords
Fairness, Identity, In‐group bias, Trust game
Sustainable Development Goals
Citation
Zimper A, Nicholls N. Choosing the agent’s group identity in atrust game with delegated decision making. Journal of Public Economic Theory 2020;22:220–244.https://doi.org/10.1111/jpet.12405.