J4 ›› 2013, Vol. 48 ›› Issue (3): 42-47.

• Articles • Previous Articles     Next Articles

Trust between principal and agent based on the sequential reciprocal equilibrium

XU Min-li, GUO Sha-sha   

  1. Business School of Central South University, Changsha 410083, Hunan, China
  • Received:2012-02-10 Online:2013-03-20 Published:2013-03-14

Abstract:

In order to establish the mechanism of trust in the principal-agent problem, the two phases trust and repeat trust game between the principal and agent were studied by using the sequential reciprocity equilibrium (SRE) and limited rational thinking. The results show that as long as the certain conditions are met to mutual sensitivity, the optimal strategy of the principal is to trust the agent, and the agent′s optimal strategy is worth the principal trust. Trust game is effective in the principalagent problem.

Key words: sequential reciprocity equilibrium; the principal-agent relationship; trust game

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