How delegation improves commitment

Grischa Perino

Economics Letters, 2010, vol. 106, issue 2, 137-139

Abstract: McCallum (1995, American Economic Review Papers and Proceedings 85 (2), 207-211) conjectures that delegation merely relocates the commitment problem but does not solve it. This holds if optimal ex-ante policies do not change if additional information becomes available. However, with a flexibility-credibility trade-off delegation improves credibility.

Keywords: Time-inconsistency; Commitment; Delegation (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (21)

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