Veto-Based Delegation

Tymofiy Mylovanov ()

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 a principal-agent model with hidden information and no monetary transfers, I establish the Veto-Power Principle: any incentive-compatible outcome can be implemented through veto-based delegation with an endogenously chosen default decision. This result demonstrates the exact nature of commitment powers required by the principal: (1) to design the default outcome and (2) to ensure that she has almost no formal control over the agent's decisions.

Keywords: veto power; asymmetric information; principal-agent relationship; no monetary transfers. (search for similar items in EconPapers)
JEL-codes: D78 D82 L22 M54 (search for similar items in EconPapers)
Date: 2005-01
New Economics Papers: this item is included in nep-cdm
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Veto-based delegation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:129

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