Delegation with a Reciprocal Agent

Ester Manna and Alessandro De Chiara

No 2016/346, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: We consider a model in which a principal may delegate the choice of a project to a better informed agent. The preferences of the agent and the principal about which project should be undertaken can be discordant. Moreover, the agent benefits from being granted more discretion in the project choice and may be motivated by reciprocity. We find that the impact of the agent's reciprocity on the discretion he receives crucially depends on the conflict of interest with the principal. If preferences are very discordant, the principal is more likely to retain authority about the choice of the project when the agent is more reciprocal. Hence, reciprocity exacerbates a severe conflict of interest. In contrast, if preferences are more congruent, discretion is broader when the agent is more reciprocal. Hence, reciprocity mitigates a mild conflict of interest. In addition, we find that the possibility of being able to offer monetary payments to the agent can make the principal worse off when the agent reciprocates. We also empirically test the predictions of our model using the German Socio-Economic Panel finding some support for our theoretical results.

Keywords: Authority; Delegation; Reciprocity. (search for similar items in EconPapers)
JEL-codes: D03 D82 D83 D86 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016
New Economics Papers: this item is included in nep-hrm, nep-mic and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://diposit.ub.edu/dspace/bitstream/2445/101683 ... Manna_Delegation.pdf (application/pdf)

Related works:
Journal Article: Delegation with a Reciprocal Agent (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ewp:wpaper:346web

Access Statistics for this paper

More papers in UB School of Economics Working Papers from University of Barcelona School of Economics Av. Diagonal 690, 08034 Barcelona. Contact information at EDIRC.
Bibliographic data for series maintained by University of Barcelona School of Economics ().