Journal article
Endogenous matching in a market with heterogeneous principals and agents
International journal of game theory, Vol.36(3), pp.587-619
Mar 2008
Abstract
We employ the assignment game of Shapley and Shubik (Int J Game Theory 1:111–130, 1972) to study the endogenous matching patterns in a market that consists of heterogenous principals and agents. We show that, in general, the equilibrium matching is non-assortative. We then characterize the equilibrium relationship between risk and performance pay and risk and fixed compensation. This is the first paper that characterizes the equilibrium matching, to its fullest possible extent, building on the Holmstrom and Milgrom (Econometrica 55:303–328, 1987) principal-agent model. This model has been used extensively in the empirical literature and therefore we hope that our results will be of value to empirical researchers who wish to study a principal-agent market.
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Details
- Title
- Endogenous matching in a market with heterogeneous principals and agents
- Creators
- Konstantinos Serfes - Department of Economics and International Business, Bennett S. LeBow College of Business Drexel University Matheson Hall, 32nd and Market Streets Philadelphia PA 19104 USA
- Publication Details
- International journal of game theory, Vol.36(3), pp.587-619
- Publisher
- Springer-Verlag; Berlin/Heidelberg
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Identifiers
- 991014877993704721
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