Decentralization and Collusion
We consider a model where agents work in sequence on a project, share information not available to the principal, and can collude. Due to limited liability the Coase theormem does not apply. The distribution of surplus among the agents is there an important control variable for the principal, which gives us a theory of how to delegate in an organization subject to moral hazard. The optimal distribution of surplus can always be achieved by delegating in the right way (decentralization) without using "message games" (centralization).
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- Sandeep Baliga & Tomas Sjostrom, 1998.
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1210, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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"The Theory of Implementation When the Planner Is a Player,"
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- Luis Corchón & Sandeep Baliga & Tomas Sjöström, 1995. "The Theory Of Implementation When The Planner Is A Player," Working Papers. Serie AD 1995-14, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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