IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Optimal Delegation with a Finite Number of States

Listed author(s):
  • Vincent Anesi

    (University of Nottingham)

  • Daniel J. Seidmann

    (University of Nottingham)

This paper contributes to the literature on optimal delegation, dating back to Holmstrom's (1984) seminal work. In contrast to models in the Holmstrom tradition, we assume that the set of states is finite. We provide a full characterization of the class of optimal delegation sets under this assumption, and show that they have a different structure from that in the continuous-state model. As the number of states tends to infinity, however, every optimal delegation set converges to that of Holmstrom (1984). We also show that, for intermediate bias, the Ally Principal fails for small changes in bias, the Uncertainty Principle may fail, and the principal prefers to appoint an amateur agent.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nottingham.ac.uk/cedex/documents/papers/2009-20.pdf
Download Restriction: no

Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2009-20.

as
in new window

Length:
Date of creation: Nov 2009
Handle: RePEc:not:notcdx:2009-20
Contact details of provider: Postal:
School of Economics University of Nottingham University Park Nottingham NG7 2RD

Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window

  1. Georgy Egorov & Konstantin Sonin, 2011. "Dictators And Their Viziers: Endogenizing The Loyalty–Competence Trade‐Off," Journal of the European Economic Association, European Economic Association, vol. 9(5), pages 903-930, October.
  2. Vijay Krishna & John Morgan, 2008. "Contracting for information under imperfect commitment," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 905-925.
  3. Frédéric Koessler & David Martimort, 2012. "Optimal Delegation with Multi-dimensional Decisions," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00754576, HAL.
  4. Ivanov, Maxim, 2010. "Informational control and organizational design," Journal of Economic Theory, Elsevier, vol. 145(2), pages 721-751, March.
  5. Vincent Anesi & Daniel J. Seidmann, 2011. "Optimal Delegation with a Finite Number of States," Discussion Papers 2011-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  6. Mylovanov, Tymofiy, 2005. "Veto-Based Delegation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 129, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  7. Sanford C. Gordon, 2007. "Directing Retribution: On the Political Control of Lower Court Judges," Journal of Law, Economics and Organization, Oxford University Press, vol. 23(2), pages 386-420, June.
  8. Kelman, Steven J. & Myers, Jeff, 2009. "Successfully Executing Ambitious Strategies in Government: An Empirical Analysis," Scholarly Articles 4481609, Harvard Kennedy School of Government.
  9. Manuel Amador & Iván Werning & George-Marios Angeletos, 2006. "Commitment vs. Flexibility," Econometrica, Econometric Society, vol. 74(2), pages 365-396, 03.
  10. Susan Athey & Andrew Atkeson & Patrick J. Kehoe, 2004. "The optimal degree of discretion in monetary policy," Staff Report 326, Federal Reserve Bank of Minneapolis.
  11. Harris, Milton & Raviv, Artur, 1996. " The Capital Budgeting Process: Incentives and Information," Journal of Finance, American Finance Association, vol. 51(4), pages 1139-1174, September.
  12. Craig Volden, 2002. "Delegating Power to Bureaucracies: Evidence from the States," Journal of Law, Economics and Organization, Oxford University Press, vol. 18(1), pages 187-220, April.
  13. Callander, Steven, 2008. "A Theory of Policy Expertise," Quarterly Journal of Political Science, now publishers, vol. 3(2), pages 123-140, July.
  14. Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
  15. Nahum D. Melumad & Toshiyuki Shibano, 1991. "Communication in Settings with No. Transfers," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 173-198, Summer.
  16. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-147, Supplemen.
  17. Kovác, Eugen & Mylovanov, Tymofiy, 2009. "Stochastic mechanisms in settings without monetary transfers: The regular case," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1373-1395, July.
  18. Kelman, Steven & Myers, Jeff, 2009. "Successfully Executing Ambitious Strategies in Government: An Empirical Analysis," Working Paper Series rwp09-009, Harvard University, John F. Kennedy School of Government.
  19. Martimort, David & Semenov, Aggey, 2006. "Continuity in mechanism design without transfers," Economics Letters, Elsevier, vol. 93(2), pages 182-189, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:not:notcdx:2009-20. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Suzanne Robey)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.