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The allocation of authority in organizations: a field experiment with bureaucrats

Bandiera, Oriana, Best, Michael Carlos, Khan, Adnan and Prat, Andrea (2021) The allocation of authority in organizations: a field experiment with bureaucrats. American Economic Review: Insights, 136 (4). 2195 – 2242. ISSN 2640-2068

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Identification Number: 10.1093/qje/qjab029

Abstract

We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives in a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. Time use data reveal agents' responses vary along the same margin: autonomy increases the time devoted to procurement, and this leads to lower prices only when monitors cause delays. By contrast, incentives work when monitors do not cause delays. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.

Item Type: Article
Official URL: https://www.aeaweb.org/journals/aeri
Additional Information: © 2021 The Authors
Divisions: Economics
School of Public Policy
?? SCPP ??
International Growth Centre
STICERD
Subjects: H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, and Operations
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
H - Public Economics > H5 - National Government Expenditures and Related Policies > H57 - Procurement
Date Deposited: 02 Sep 2021 10:09
Last Modified: 10 Jan 2022 08:18
URI: http://eprints.lse.ac.uk/id/eprint/111840

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