Delegating learning

Juan F. Escobar () and Qiaoxi Zhang ()
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Juan F. Escobar: Department of Industrial Engineering, University of Chile
Qiaoxi Zhang: Departmento de Economia, Facultad de Economia y Empresa, Universidad Diego Portales

Theoretical Economics, 2021, vol. 16, issue 2

Abstract: Learning is crucial to organizational decision making but often needs to be delegated. We examine a dynamic delegation problem where a principal decides on a project with uncertain profitability. A biased agent, who is initially as uninformed as the principal, privately learns the profitability over time and communicates to the principal. We formulate learning delegation as a dynamic mechanism design problem and characterize the optimal delegation scheme. We show that private learning gives rise to the tradeoff between how much information to acquire and how promptly it is reflected in the decision. We discuss implications on learning delegation for distinct organizations.

Keywords: Private learning; delegation; delays; deadlines; commitment; cheap talk (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2021-05-03
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