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Delegation to a potentially uninformed agent

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  • Aggey Semenov

    ()
    (Department of Economics, University of Ottawa, 120 University St., Ottawa,Ontario)

Abstract

We consider a delegation problem with a biased and potentially uninformed agent when the principal cannot use monetary payments. If the bias between the principal and the agent is large then the optimal delegation set is an interval. When the bias is small or medium the optimal delegation set is no longer connected. It can be one of two types: 1) with an interval and low option, 2) with two intervals. In all cases the agent has less discretion. However, in the case of medium bias the principal delegates in a wider range than in the case of an informed agent

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Bibliographic Info

Paper provided by University of Ottawa, Department of Economics in its series Working Papers with number 1215E.

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Length: 17 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:ott:wpaper:1215e

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Keywords: energy; Information; bias; non-informed agent; delegation set;

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References

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  1. Dezsoe Szalay, 2004. "The Economics of Clear Advice and Extreme Options," Econometric Society 2004 North American Winter Meetings 233, Econometric Society.
  2. Martimort, David & Semenov, Aggey, 2006. "Continuity in mechanism design without transfers," Economics Letters, Elsevier, vol. 93(2), pages 182-189, November.
  3. Alonso, Ricardo & Matouschek, Niko, 2005. "Optimal Delegation," CEPR Discussion Papers 5289, C.E.P.R. Discussion Papers.
  4. Lewis Tracy R. & Sappington David E. M., 1993. "Ignorance in Agency Problems," Journal of Economic Theory, Elsevier, vol. 61(1), pages 169-183, October.
  5. Armstrong, Mark, 1995. "Delegation and discretion," MPRA Paper 17069, University Library of Munich, Germany.
  6. Kovác, Eugen & Mylovanov, Tymofiy, 2009. "Stochastic mechanisms in settings without monetary transfers: The regular case," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1373-1395, July.
  7. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-63, July.
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Cited by:
  1. Kovác, Eugen & Krähmer, Daniel, 2013. "Optimal Sequential Delegation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 427, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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