EconPapers    
Economics at your fingertips  
 

Transferable Control

Philippe Aghion, Mathias Dewatripont () and Patrick Rey ()

Journal of the European Economic Association, 2004, vol. 2, issue 1, 115-138

Abstract: In this paper, we introduce the notion of transferable control, defined as a situation where one party (the principal, say) can transfer control to another party (the agent) but cannot commit herself to do so. One theoretical foundation for this notion builds on the distinction between formal and real authority introduced by Aghion and Tirole, in which the actual exercise of authority may require noncontractible information, absent which formal control rights are vacuous. We use this notion to study the extent to which control transfers may allow an agent to reveal information regarding his ability or willingness to cooperate with the principal in the future. We show that the distinction between contractible and transferable control can drastically influence how learning takes place: with contractible control, information about the agent can often be acquired through revelation mechanisms that involve communication and message-contingent control allocations; in contrast, when control is transferable but not contractible, it can be optimal to transfer control unconditionally and learn instead from the way in which the agent exercises control. (JEL: C70, C72, D23, L2) Copyright (c) 2004 by the European Economic Association.

Date: 2004
References: Add references at CitEc
Citations View citations in EconPapers (38) Track citations by RSS feed

Downloads: (external link)
http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1542-4774/issues link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Transferable control (2006)
Working Paper: Transferable Control (2004) Downloads
Working Paper: Transferable control (2004)
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:tpr:jeurec:v:2:y:2004:i:1:p:115-138

Ordering information: This journal article can be ordered from
http://www.mitpressjournals.org/jeea

Access Statistics for this article

Journal of the European Economic Association is currently edited by Xavier Vives, George-Marios Angeletos, Orazio P. Attanasio, Fabio Canova and Roberto Perotti

More articles in Journal of the European Economic Association from MIT Press
Bibliographic data for series maintained by Ann Olson ().

 
Page updated 2018-11-07
Handle: RePEc:tpr:jeurec:v:2:y:2004:i:1:p:115-138