Cookies?
Library Header Image
LSE Research Online LSE Library Services

Relational delegation

Alonso, Ricardo and Matouschek, Niko (2007) Relational delegation. The RAND Journal of Economics, 38 (4). pp. 1070-1089. ISSN 0741-6261

[img]
Preview
PDF - Accepted Version
Download (656kB) | Preview
Identification Number: 10.1111/j.0741-6261.2007.00126.x

Abstract

We analyze a cheap talk game with partial commitment by the principal. We first treat the principal's commitment power as exogenous and then endogenize it in an infinitely repeated game. We characterize optimal decision making for any commitment power and show when it takes the form of threshold delegation—in which case the agent can make any decision below a threshold—and centralization—in which case the agent has no discretion. For small biases, threshold delegation is optimal for any smooth distribution. Outsourcing can only be optimal if the principal's commitment power is sufficiently small.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2007 RAND
Subjects: B Philosophy. Psychology. Religion > BC Logic
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Sets: Departments > Management
Date Deposited: 05 Aug 2014 14:16
Last Modified: 05 Aug 2014 14:34
URI: http://eprints.lse.ac.uk/id/eprint/58668

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics