An Agent-Based Model of Delegation Relationships With Hidden-Action: On the Effects of Heterogeneous Memory on Performance

09/09/2020
by   Patrick Reinwald, et al.
0

We introduce an agent-based model of delegation relationships between a principal and an agent, which is based on the standard-hidden action model introduced by Holmström and, by doing so, provide a model which can be used to further explore theoretical topics in managerial economics, such as the efficiency of incentive mechanisms. We employ the concept of agentization, i.e., we systematically transform the standard hidden-action model into an agent-based model. Our modeling approach allows for a relaxation of some of the rather "heroic" assumptions included in the standard hidden-action model, whereby we particularly focus on assumptions related to the (i) availability of information about the environment and the (ii) principal's and agent's cognitive capabilities (with a particular focus on their learning capabilities and their memory). Our analysis focuses on how close and how fast the incentive scheme, which endogenously emerges from the agent-based model, converges to the solution proposed by the standard hidden-action model. Also, we investigate whether a stable solution can emerge from the agent-based model variant. The results show that in stable environments the emergent result can nearly reach the solution proposed by the standard hidden-action model. Surprisingly, the results indicate that turbulence in the environment leads to stability in earlier time periods.

READ FULL TEXT
POST COMMENT

Comments

There are no comments yet.

Authors

page 1

page 2

page 3

page 4

04/13/2020

An agent-based negotiation model and its implementation in Repast

We propose an agent-based model, MNegoti, for simulating multilateral ne...
08/19/2017

A novel agent-based simulation framework for sensing in complex adaptive environments

In this paper we present a novel Formal Agent-Based Simulation framework...
07/27/2018

Agent cognition through micro-simulations: Adaptive and tunable intelligence with NetLogo LevelSpace

We present a method of endowing agents in an agent-based model (ABM) wit...
07/17/2011

From decision to action : intentionality, a guide for the specification of intelligent agents' behaviour

This article introduces a reflexion about behavioural specification for ...
12/05/2017

Modeling the formation of R&D alliances: An agent-based model with empirical validation

We develop an agent-based model to reproduce the size distribution of R&...
07/23/2021

An agent-based model for modal shift in public transport

Modal shift in public transport as a consequence of a disruption on a li...
06/29/2020

An agent-based model of interdisciplinary interactions in science

An increased interdisciplinarity in science projects has been highlighte...
This week in AI

Get the week's most popular data science and artificial intelligence research sent straight to your inbox every Saturday.