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Delegation versus authority

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  • Krähmer, Daniel
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    Abstract

    The paper studies the role of delegation and authority within a principal-agent relation in which a non-contractible action has to be taken. The agent has private information relevant for the principal, but has policy preferences different from the principal. Consequently, an information revelation problem arises. We contribute to the literature by assuming transferable utility and contractibility of messages and decision rights. While delegation leads to loss of control, it facilitates the agent’s participation and leads to an informed decision. Moreover, message-contingent delegation creates incentives for information revelation. We derive the optimal contract for the principal and investigate when delegation outperforms authority. -- Das Papier untersucht die Bestimmungsgründe für die Delegation von Entscheidungen in Organisationen. Wir betrachten eine Prinzipal-Agent Beziehung, in der eine Entscheidung getroffen werden muss, die vertraglich nicht festgeschrieben werden kann. Der Agent verfügt über für den Prinzipal relevante private Information, hat aber andere Entscheidungspräferenzen als der Prinzipal. Im Unterschied zur bisherigen Literatur betrachten wir den Fall, dass Nutzen transferierbar ist, und dass der Prinzipal sein Entscheidungsrecht in Abhängigkeit eines Berichtes des Agenten an diesen abtreten kann. Delegation führt einerseits zu einem Kontrollverlust für den Prinzipal. Andererseits erleichtert sie die Partizipation des Agenten und führt zu einer informierten Entscheidung. Darüber hinaus schafft Delegation Anreize zur Informationsoffenlegung, wenn dem Agenten das Entscheidungsrecht in Abhängigkeit seines Berichtes übertragen wird. Wir untersuchen, wann es für den Prinzipal optimal ist, die Entscheidung zu delegieren.

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    Bibliographic Info

    Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number FS IV 02-26.

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    Date of creation: 2002
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    Handle: RePEc:zbw:wzbmpg:fsiv0226

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    Related research

    Keywords: Delegation; Partial Contracting; Mechanism Design; Imperfect Commitment; Transferable Utility;

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    References

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    1. Benabou, R. & Tirole, J., 2000. "Self-Confidence and Social Interactions," Papers 210, Princeton, Woodrow Wilson School - Public and International Affairs.
    2. Helmut Bester & Roland Strausz, . "Imperfect Commitment and the Revelation Principle," Papers 004, Departmental Working Papers.
    3. Kay Mitusch & Roland Strausz, . "Mediators and Mechanism Design: Why Firms Hire Consultants," Papers 005, Departmental Working Papers.
    4. Kay Mitusch & Roland Strausz, 2000. "Mediation in Situations of Conflict," Econometric Society World Congress 2000 Contributed Papers 0361, Econometric Society.
    5. Dezso Szalay, 2000. "Optimal Delegation," Econometric Society World Congress 2000 Contributed Papers 0749, Econometric Society.
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    Cited by:
    1. Ambec, S., 2003. "A theory of authority in bilateral contracting," Working Papers 200303, Grenoble Applied Economics Laboratory (GAEL).

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