Indirect Evolution Versus Strategic Delegation: A Comparison of Two Approaches to Explaining Economic Institutions

M. Dufwenberg, W. Güth

Research output: Working paperDiscussion paperOther research output

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Abstract

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 compared to the usual duopoly solution, indirect evolution causes a more competitive behavior. Thus the case at hand suffices to demonstrate the difference between the two approaches in explaining economic institutions.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Volume1997-12
Publication statusPublished - 1997

Publication series

NameCentER Discussion Paper
Volume1997-12

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Economic institutions
Strategic delegation
Indirect evolution
Duopoly
Seller
Strategic choice
Incentives
Profit
Competitive behavior

Keywords

  • noncooperative games
  • duopoly
  • organizational behavior

Cite this

Dufwenberg, M., & Güth, W. (1997). Indirect Evolution Versus Strategic Delegation: A Comparison of Two Approaches to Explaining Economic Institutions. (CentER Discussion Paper; Vol. 1997-12). Tilburg: CentER, Center for Economic Research.
Dufwenberg, M. ; Güth, W. / Indirect Evolution Versus Strategic Delegation : A Comparison of Two Approaches to Explaining Economic Institutions. Tilburg : CentER, Center for Economic Research, 1997. (CentER Discussion Paper).
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Dufwenberg, M & Güth, W 1997 'Indirect Evolution Versus Strategic Delegation: A Comparison of Two Approaches to Explaining Economic Institutions' CentER Discussion Paper, vol. 1997-12, CentER, Center for Economic Research, Tilburg.

Indirect Evolution Versus Strategic Delegation : A Comparison of Two Approaches to Explaining Economic Institutions. / Dufwenberg, M.; Güth, W.

Tilburg : CentER, Center for Economic Research, 1997. (CentER Discussion Paper; Vol. 1997-12).

Research output: Working paperDiscussion paperOther research output

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Dufwenberg M, Güth W. Indirect Evolution Versus Strategic Delegation: A Comparison of Two Approaches to Explaining Economic Institutions. Tilburg: CentER, Center for Economic Research. 1997. (CentER Discussion Paper).