Delegation and incentives
AbstractThis paper analyses the relation between authority and incentives. It extends the standard principal / agent model by a project selection stage in which the principal can either delegate the choice of project to the agent or keep the authority. The agent's subsequent choice of e ort depends both on monetary incentives and the selected project. We nd that the consideration of e ort incentives makes the principal less likely to delegate the authority over projects to the agent. In fact, if the agent is protected by limited liability, delegation is never optimal. --
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Bibliographic InfoPaper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2007/1.
Date of creation: 2006
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Authority; delegation; incentives; moral hazard; principal / agent problem; limited liability;
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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