Limited Communication and Responsibility Budgeting

Dongsoo Shin () and Sungho Yun

Journal of Institutional and Theoretical Economics (JITE), 2017, vol. 173, issue 3, 548-564

Abstract: We consider an agency model with three-tier hierarchy, in which the principal cannot observe the manager's and the worker's task environments. Communication is limited in that only the manager can report to the principal about the task environments. The principal decides whether or not to give the manager responsibility for project budgeting. Under responsibility budgeting, the manager receives all of the resources for the project tasks and shares those resources with the worker. Although the manager in such an arrangement has more direct sources of information rent, his rent-seeking incentive becomes weaker. This trade-off determines whether or not larger responsibility for budgeting is optimal.

JEL-codes: D82 D86 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/limited-com ... 45616x14701162930217 (text/html)
Fulltext access is included for subscribers to the printed version.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mhr:jinste:urn:sici:0932-4569(201709)173:3_548:lcarb_2.0.tx_2-3

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

DOI: 10.1628/093245616X14701162930217

Access Statistics for this article

Journal of Institutional and Theoretical Economics (JITE) is currently edited by Gerd Mühlheußer and Bayer, Ralph-C

More articles in Journal of Institutional and Theoretical Economics (JITE) from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().