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Obtaining information by diversifying projects or why specialization is inefficient

Author

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  • Amihai Glazer
  • Stef Proost

Abstract

We examine how diversification of projects assigned to an agency can enhance efficiency by informing a principal of the agency’s quality. Projects that appear inefficient in isolation may be justified when assigned to the same agency. Assigning different tasks to different special purpose governments, though allowing for technical efficiency in the management of each project, may nevertheless reduce overall efficiency.

Suggested Citation

  • Amihai Glazer & Stef Proost, 2008. "Obtaining information by diversifying projects or why specialization is inefficient," Working Papers Department of Economics ces0815, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces0815
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    File URL: https://lirias.kuleuven.be/bitstream/123456789/183998/1/DPS+0815.pdf
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    More about this item

    Keywords

    Special purpose governments; Asymmetric information; Bureaucracy; Project evaluation;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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