On Delegation under Relational Contracts

Oliver Gürtler

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: In this paper, a principal’s decision between delegating two tasks or handling one of the two tasks herself is analyzed. We assume that the principal uses both, formal contracts and informal agreements sustained by the value of future relationships (relational contracts) as incentive device. It is found that the principal is less likely to delegate both tasks in a dynamic setting than in a static one (where formal contracts are the only feasible incentive device), as handling one task herself enables a much wider use of relational contracts.

Keywords: Job design; relational contracts; formal contracts; delegation (search for similar items in EconPapers)
JEL-codes: D82 J33 L23 M52 M54 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-bec, nep-mic and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:113

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