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Delegating Management to Experts

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Author Info
Chifeng Dai
Tracy R. Lewis () (Duke University)
Giuseppe Lopomo

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Abstract

Owners of property and assets frequently delegate decisions about operating and maintaining their property to managers who are better informed about local market conditions. We analyze how owners optimally contract with managers who vary in their expertise at prescribing service. We show that the most expert managers offer the greatest variation in operating recommendations. Owners benefit from dealing with experts provided they contract sequentially, whereby terms are negotiated gradually as the manager acquires information. Ordering information: This article can be ordered from http://gemini.econ.umd.edu/cgi-bin/rje_online.cgi?action=buy&year=2006&issue=aut&page=503&tid=30492&sc=1869P1N9.

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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 37 (2006)
Issue (Month): 3 (Autumn)
Pages: 503-520
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:rje:randje:v:37:y:2006:3:p:503-520

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  1. Patrick Bajari & Han Hong & Ahmed Khwaja, 2006. "Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis," NBER Working Papers 12445, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Inderst, Roman & Peitz, Martin, 2008. "Selling Service Plans to Differentially Informed Customers," ZEW Discussion Papers 08-125, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Chifeng Dai, 2008. "Regulating a risk-averse firm under incomplete information," Journal of Regulatory Economics, Springer, vol. 34(1), pages 75-85, August. [Downloadable!] (restricted)
  4. Goodall, Amanda H. & Kahn, Lawrence M. & Oswald, Andrew J., 2008. "Why Do Leaders Matter? The Role of Expert Knowledge," IZA Discussion Papers 3583, Institute for the Study of Labor (IZA). [Downloadable!]
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This page was last updated on 2009-11-13.


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