(Not) delegating decisions to experts: The effect of uncertainty
Journal of Economic Theory, 2020, vol. 190, issue C
I construct a dynamic delegation model in which a principal can replace the agent to whom to delegate over time. Its unique feature is that the principal dynamically faces a choice between two types of agents with different multidimensional characteristics: experts with uncertain biases and non-experts with no bias. I investigate under what conditions the principal delegates to non-experts by focusing on the effect of the uncertainty regarding preference heterogeneity among experts. Its effect is different depending on the type of uncertainty: an increase in risk and in ambiguity (i.e., Knightian uncertainty) work in opposite directions with higher ambiguity rather than risk being a source of the delegation to non-experts. This analysis sheds new light on the sources of anti-elitism in politics.
Keywords: Dynamic delegation; Experts; Agency problems; Ambiguity; Populism (search for similar items in EconPapers)
JEL-codes: C73 D72 D81 H11 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:190:y:2020:i:c:s0022053120301101
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