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Delegation to potentially uninformed agent

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  • Semenov, Aggey

Abstract

We consider a delegation problem with a 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 however, the optimal delegation set is no longer connected. It can be one of two types: with an interval and low option, the other with two intervals. In all cases the agent has less discretion. However, in the case of medium biases the principal delegates in a wider range than in the case of informed agent. In all cases the agent will be given more freedom if he is more informed.

Suggested Citation

  • Semenov, Aggey, 2012. "Delegation to potentially uninformed agent," MPRA Paper 42080, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42080
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    References listed on IDEAS

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    1. Ricardo Alonso & Niko Matouschek, 2008. "Optimal Delegation," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 259-293.
    2. Armstrong, M., 1994. "Delegation and discretion," Discussion Paper Series In Economics And Econometrics 9421, Economics Division, School of Social Sciences, University of Southampton.
    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. Dezsö Szalay, 2005. "The Economics of Clear Advice and Extreme Options," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1173-1198.
    5. 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.
    6. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-963, July.
    7. Martimort, David & Semenov, Aggey, 2006. "Continuity in mechanism design without transfers," Economics Letters, Elsevier, vol. 93(2), pages 182-189, November.
    8. 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.
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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.

    More about this item

    Keywords

    Delegation; non-informed agent; delegation set;

    JEL classification:

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

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