Monitoring your Friends, not your Foes: Strategic Ignorance and the Delegation of Real Authority

Silvia Dominguez-Martinez (), Randolph Sloof and Ferdinand von Siemens

No 3172, CESifo Working Paper Series from CESifo

Abstract: In this laboratory experiment we study the use of strategic ignorance to delegate real authority within a firm. A worker can gather information on investment projects, while a manager makes the implementation decision. The manager can monitor the worker. This allows her to better exploit the information gathered by the worker, but also reduces the worker's incentives to gather information in the first place. Both effects of monitoring are influenced by the interest alignment between manager and worker. Our data confirms the theoretical predictions that optimal monitoring depends non-monotonically on the level of interest alignment. We also find evidence for hidden costs of control and preferences for control, but these have no substantial effects on organizational outcomes.

Keywords: delegation; real authority; strategic ignorance (search for similar items in EconPapers)
JEL-codes: D20 D40 D63 D82 J30 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Monitoring your Friends, not your Foes: Strategic Ignorance and the Delegation of Real Authority (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3172

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