Authority and Communication in Organizations
AbstractThis paper studies delegation as an alternative to communication. We show that a principal prefers to delegate control to a better informed agent rather than to communicate with this agent as long as the incentive conflict is not too large relative to the principal's uncertainty about the environment. We further identify cases in which the principal optimally delegates control to an “intermediary”, and show that keeping a veto-right typically reduces the expected utility of the principal unless the incentive conflict is extreme. Copyright 2002, Wiley-Blackwell.
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Bibliographic InfoArticle provided by Oxford University Press in its journal The Review of Economic Studies.
Volume (Year): 69 (2002)
Issue (Month): 4 ()
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Other versions of this item:
- Wouter Dessein, 2000. "Authority and Communication in Organizations," Econometric Society World Congress 2000 Contributed Papers 1747, Econometric Society.
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