In this paper, we introduce the notion of transferable control, defined as a situation where one party (the principal, say) can transfer control to another party (the agent) but cannot commit herself to do so. One theoretical foundation for this notion builds on the distinction between formal and real authority introduced by Aghion and Tirole, in which the actual exercise of authority may require noncontractible information, absent which formal control rights are vacuous. We use this notion to study the extent to which control transfers may allow an agent to reveal information regarding his ability or willingness to cooperate with the principal in the future. We show that the distinction between contractible and transferable control can drastically influence how learning takes place: with contractible control, information about the agent can often be acquired through revelation mechanisms that involve communication and message-contingent control allocations; in contrast, when control is transferable but not contractible, it can be optimal to transfer control unconditionally and learn instead from the way in which the agent exercises control. © 2004 by the European Economic Association.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||2004|
|Date of revision:|
|Publication status:||Published in: European Economic Association. Journal (2004) v.2,p.115-138|
|Contact details of provider:|| Postal: |
Web page: http://difusion.ulb.ac.be
More information through EDIRC
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.:
- Mathias Dewatripont & Philippe Aghion & Patrick Rey, 2004.
ULB Institutional Repository
2013/9647, ULB -- Universite Libre de Bruxelles.
- HOLMSTROM, Bengt, .
"Moral hazard and observability,"
CORE Discussion Papers RP
-379, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Oliver Hart & John Moore, 1999.
"On the Design of Hierarchies: Coordination Versus Specialization,"
NBER Working Papers
7388, National Bureau of Economic Research, Inc.
- Oliver Hart & John Moore, 2005. "On the Design of Hierarchies: Coordination versus Specialization," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 675-702, August.
- Oliver Hart & John Moore, 1999. "On the Design of Hierarchies: Coordination Versus Specialization," Harvard Institute of Economic Research Working Papers 1880, Harvard - Institute of Economic Research.
- Oliver Hart & John Moore, 2004. "On the Design of Hierarchies: Coordination versus Specialization," ESE Discussion Papers 117, Edinburgh School of Economics, University of Edinburgh.
- Hart, Oliver D. & Moore, John, 2005. "On the Design of Hierarchies: Coordination Versus Specialization," Scholarly Articles 3448676, Harvard University Department of Economics.
- Oliver Hart & John Moore, 1999. "On the design of hierarchies: coordination versus specialization," LSE Research Online Documents on Economics 19340, London School of Economics and Political Science, LSE Library.
- Oliver Hart & John Moore, 1999. "On the Design of Hierarchies: Coordination Versus Specialization," STICERD - Theoretical Economics Paper Series 375, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Mathias Dewatripont & Philippe Aghion & Patrick Rey, 2002.
"On partial contracting,"
ULB Institutional Repository
2013/9627, ULB -- Universite Libre de Bruxelles.
- Bengt Holmstrom, 1982.
"Moral Hazard in Teams,"
Bell Journal of Economics,
The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
- Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, March.
- Patrick Legros & Andrew F. Newman, 2004.
"Competing for Ownership,"
Boston University - Department of Economics - The Institute for Economic Development Working Papers Series
dp-148, Boston University - Department of Economics.
- Patrick Legros & Andrew F. Newman, 2007. "Competing for Ownership," Boston University - Department of Economics - Working Papers Series WP2007-003, Boston University - Department of Economics.
- Patrick Legros & Andrew F. Newman, 2007. "Competing for Ownership," CEDI Discussion Paper Series 07-02, Centre for Economic Development and Institutions(CEDI), Brunel University.
- Patrick Legros & Andrew Newman, 2008. "Competing for ownership," ULB Institutional Repository 2013/7020, ULB -- Universite Libre de Bruxelles.
- Legros, Patrick & Newman, Andrew, 2000. "Competing for Ownership," CEPR Discussion Papers 2573, C.E.P.R. Discussion Papers.
- Wouter Dessein, 2002.
"Authority and Communication in Organizations,"
Review of Economic Studies,
Oxford University Press, vol. 69(4), pages 811-838.
- Wouter Dessein, 2000. "Authority and Communication in Organizations," Econometric Society World Congress 2000 Contributed Papers 1747, Econometric Society.
When requesting a correction, please mention this item's handle: RePEc:ulb:ulbeco:2013/9647. 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: (Benoit Pauwels)
If references are entirely missing, you can add them using this form.