Delegation versus authority
[Delegation versus Autorität]
The paper studies the role of delegation and authority within a principal-agent relation in which a non-contractible action has to be taken. The agent has private information relevant for the principal, but has policy preferences different from the principal. Consequently, an information revelation problem arises. We contribute to the literature by assuming transferable utility and contractibility of messages and decision rights. While delegation leads to loss of control, it facilitates the agent’s participation and leads to an informed decision. Moreover, message-contingent delegation creates incentives for information revelation. We derive the optimal contract for the principal and investigate when delegation outperforms authority.
|Date of creation:||2002|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (0)30 25491-402
Fax: +49 (0)30 25491-400
Web page: http://www.wzb.eu/
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.:
- Helmut Bester & Roland Strausz, . "Imperfect Commitment and the Revelation Principle," Papers 004, Departmental Working Papers.
- Kay Mitusch & Roland Strausz, . "Mediators and Mechanism Design: Why Firms Hire Consultants," Papers 005, Departmental Working Papers.
- Kay Mitusch & Roland Strausz, 2000. "Mediation in Situations of Conflict," Econometric Society World Congress 2000 Contributed Papers 0361, Econometric Society.
- R. Benabou & J. Tirole, 1999.
"Self-Confidence and Social Interactions,"
Princeton Economic Theory Papers
00s2, Economics Department, Princeton University.
- Roland Babou & Jean Tirole, 1999. "Self-Confidence And Social Interactions," Working Papers 151, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
- Roland Benabou & Jean Tirole, 2000. "Self-Confidence and Social Interactions," NBER Working Papers 7585, National Bureau of Economic Research, Inc.
- Benabou, R. & Tirole, J., 2000. "Self-Confidence and Social Interactions," Papers 210, Princeton, Woodrow Wilson School - Public and International Affairs.
- Szalay, Dezsö, 2000.
Sonderforschungsbereich 504 Publications
00-29, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Dezso Szalay, 2000. "Optimal Delegation," Econometric Society World Congress 2000 Contributed Papers 0749, Econometric Society.
When requesting a correction, please mention this item's handle: RePEc:zbw:wzbmpg:fsiv0226. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.