On the Costs and Benefits of Delegation in Organizations
AbstractWe examine the question whether a decision should be delegated to a subordinate and whether this is done efficiently. We illustrate that delegation is useful for several reasons. First, it serves to test agents with unknown ability. Then, it may improve their motivation when carrying out decisions. Moreover, delegation to subordinates may be useful to limit the power of middle managers. Costs of delegation arise due to the risk of having lower quality decisions and because after having made a successful decision a subordinate's power is increased. The latter may lead to inefficient delegation decisions.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 600.
Date of creation: Jul 1999
Date of revision:
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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
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Delegation; Decentralization; Incentives; Empowerment; Power; Decision Making;
Other versions of this item:
- Dirk Sliwka, 2001. "On the Costs and Benefits of Delegation in Organizations," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(4), pages 568-, December.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
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- Ernst Fehr & Holger Herz & Tom Wilkening, 2010.
"The Lure of Authority: Motivation and Incentive E ects of Power,"
Department of Economics - Working Papers Series
1115, The University of Melbourne.
- Ernst Fehr & Holger Herz & Tom Wilkening, 2013. "The Lure of Authority: Motivation and Incentive Effects of Power," American Economic Review, American Economic Association, vol. 103(4), pages 1325-59, June.
- Ernst Fehr & Holger Herz & Tom Wilkening, 2012. "The lure of authority: Motivation and incentive effects of power," UBSCENTER - Working Papers 002, UBS International Center of Economics in Society - Department of Economics - University of Zurich.
- Fehr, Ernst & Herz, Holger & Wilkening, Tom, 2012. "The Lure of Authority: Motivation and Incentive Effects of Power," IZA Discussion Papers 7030, Institute for the Study of Labor (IZA).
- Ernst Fehr & Holger Herz & Tom Wilkening, 2012. "The lure of authority: Motivation and incentive effects of power," ECON - Working Papers 099, Department of Economics - University of Zurich.
- Ernst Fehr & Holger Herz & Tom Wilkening, 2012. "The Lure of Authority: Motivation and Incentive Effects of Power," CESifo Working Paper Series 4021, CESifo Group Munich.
- Gary Charness & Ramon Cobo-Reyes & Natalia Jimenez & Juan A. Lacomba & Francisco Lagos, 2012. "The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game," American Economic Review, American Economic Association, vol. 102(5), pages 2358-79, August.
- Dirk Sliwka, 2006.
"On the Notion of Responsibility in Organizations,"
Journal of Law, Economics and Organization,
Oxford University Press, vol. 22(2), pages 523-547, October.
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