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Contract Complexity, Incentives and the Value of Delegation

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Author Info
Melamad, N.
Mookherjee, D.
Reichelstein, S.

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Abstract

In settings where the Revelation Principle applies, delegation arrangements are frequently inferior to centralized decision-making, and at best achieve the same level of performance.This paper studies the value of delegation when organizations are constrained by a bound on the number of contingencies in any contract.

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Publisher Info
Paper provided by Boston University - Industry Studies Programme in its series Papers with number 70.

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Length: 34 pages
Date of creation: 1996
Date of revision:
Handle: RePEc:fth:bostin:70

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Postal: Boston University, Industry Studies Program; Department of Economics, 270 Bay Road, Boston, Massachusetts 02215.
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Web page: http://www.bu.edu/econ/isp/
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Related research
Keywords: CONTRACTS; ENTERPRISES; MANAGEMENT;

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Find related papers by JEL classification:
K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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  2. Oliver Gürtler, 2005. "On Delegation under Relational Contracts," Bonn Econ Discussion Papers bgse32_2005, University of Bonn, Germany. [Downloadable!]
  3. Pranab Bardhan & Dilip Mookherjee, 2005. "Decentralization, Corruption and Government Accountability: An Overview," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-152, Boston University - Department of Economics. [Downloadable!]
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  7. Currie, David & Levine, Paul L & Rickman, Neil, 1999. "Delegation and the Ratchet Effect: Should Regulators Be Pro-Industry?," CEPR Discussion Papers 2274, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. M. Martin Boyer, 2004. "On the Use of Hierarchies to Complete Contracts when Players Have Limited Abilities," CIRANO Working Papers 2004s-41, CIRANO. [Downloadable!]
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  11. Stefan Ambec, 2003. "A Theory of Authority in Bilateral Contracting," CSEF Working Papers 102, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
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  12. Matejka, M. & De Waegenaere, A., 2000. "Organizational design and management accounting change," Discussion Paper 61, Tilburg University, Center for Economic Research. [Downloadable!]
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