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Delegation to a potentially uninformed agent

Author

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  • Aggey Semenov

    (Department of Economics, University of Ottawa, 120 University St., Ottawa,Ontario)

Abstract

We consider a delegation problem with a biased and potentially uninformed agent when the principal cannot use monetary payments. If the bias between the principal and the agent is large then the optimal delegation set is an interval. When the bias is small or medium the optimal delegation set is no longer connected. It can be one of two types: 1) with an interval and low option, 2) with two intervals. In all cases the agent has less discretion. However, in the case of medium bias the principal delegates in a wider range than in the case of an informed agent

Suggested Citation

  • Aggey Semenov, 2012. "Delegation to a potentially uninformed agent," Working Papers 1215E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:1215e
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    References listed on IDEAS

    as
    1. Ricardo Alonso & Niko Matouschek, 2008. "Optimal Delegation," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 259-293.
    2. Armstrong, Mark, 1995. "Delegation and discretion," MPRA Paper 17069, University Library of Munich, Germany.
    3. Lewis Tracy R. & Sappington David E. M., 1993. "Ignorance in Agency Problems," Journal of Economic Theory, Elsevier, vol. 61(1), pages 169-183, October.
    4. 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.
    5. 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.
    6. 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.
    7. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-963, July.
    8. Martimort, David & Semenov, Aggey, 2006. "Continuity in mechanism design without transfers," Economics Letters, Elsevier, vol. 93(2), pages 182-189, November.
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    Cited by:

    1. Krähmer, Daniel & Kováč, Eugen, 2016. "Optimal sequential delegation," Journal of Economic Theory, Elsevier, vol. 163(C), pages 849-888.

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    More about this item

    Keywords

    energy; Information; bias; non-informed agent; delegation set;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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