Delegation and Information Revelation

Axel Gautier () and Dimitri Paolini

Journal of Institutional and Theoretical Economics (JITE), 2007, vol. 163, issue 4, 574-597

Abstract: This paper analyzes, in a setup where only the control over actions is contractible, the rationale for delegation. An organization must take two decisions. The payoffs are affected by a random parameter, and only the agent knows its realization. If the principal delegates the control over the first decision tothe agent, his choice may indicate the information that he possesses. If the principal retains control over the second decision, discovering this information is valuable. Hence, this paper provides a new rationale for delegation: A transfer of control to the informed party can be used to discover private information.

JEL-codes: D23 D82 L22 M41 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Delegation and information revelation (2007)
Working Paper: Delegation and information revelation (2000)
Working Paper: Delegation and Information Revelation (2000)
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