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Constraining to Motivate

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  • Liqun Liu

Abstract

Effective decision-making often involves a principal delegating authority to better-informed agents. However, when agents'careers depend on how their decisions are perceived, they may avoid acquiring costly information and instead choose politically safe actions. We propose a simple solution: constrained delegation. By restricting the agent's choice set, the principal can reshape the reputational stakes attached to the remaining options and restore incentives to acquire information. The mechanism applies broadly to settings where political or market-based incentives discourage information acquisition and shows how limiting discretion can, counterintuitively, improve decision quality.

Suggested Citation

  • Liqun Liu, 2021. "Constraining to Motivate," Papers 2111.00522, arXiv.org, revised Jul 2026.
    • Handle: RePEc:arx:papers:2111.00522
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    References listed on IDEAS

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    1. Liqun Liu, 2020. "Motivating Careerists," Papers 2012.01331, arXiv.org, revised May 2026.
    2. Mark Armstrong & John Vickers, 2010. "A Model of Delegated Project Choice," Econometrica, Econometric Society, vol. 78(1), pages 213-244, January.
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    4. Bendor, Jonathan & Meirowitz, Adam, 2004. "Spatial Models of Delegation," American Political Science Review, Cambridge University Press, vol. 98(2), pages 293-310, May.
    5. Morelli, Massimo & Foarta, Dana, 2020. "Equilibrium Reforms and Endogenous Complexity," CEPR Discussion Papers 15136, Centre for Economic Policy Research.
    6. Fox, Justin & Stephenson, Matthew C., 2011. "Judicial Review as a Response to Political Posturing," American Political Science Review, Cambridge University Press, vol. 105(2), pages 397-414, May.
    7. Xie, Yinxi & Xie, Yang, 2017. "Machiavellian experimentation," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 685-711.
    8. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-661, May.
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    10. Dezsö Szalay, 2005. "The Economics of Clear Advice and Extreme Options," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 1173-1198.
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