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A Model of Delegated Project Choice

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  • Mark Armstrong
  • John Vickers

Abstract

We present a model in which a principal delegates the choice of project to an agent with different preferences. The principal determines the set of projects from which the agent may choose. The principal can verify the characteristics of the project chosen by the agent, but does not know which other projects were available to the agent. We consider situations where the collection of available projects is exogenous to the agent but uncertain, where the agent must invest effort to discover a project, where the principal can pay the agent to choose a desirable project, and where the principal can adopt more complex schemes than simple permission sets. Copyright 2010 The Econometric Society.

Suggested Citation

  • Mark Armstrong & John Vickers, 2010. "A Model of Delegated Project Choice," Econometrica, Econometric Society, vol. 78(1), pages 213-244, January.
    • Handle: RePEc:ecm:emetrp:v:78:y:2010:i:1:p:213-244
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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