Optimal Delegation

Niko Matouschek and Ricardo Alonso

No 5289, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyse the optimal delegation of decision rights by a uninformed principal to an informed but biased agent. When the principal cannot use message-contingent transfers, she offers the agent a set of decisions from which he can choose his preferred one. We fully characterize the optimal delegation set for general distributions of the state space and preferences with arbitrary continuous state-dependent biases. We also provide necessary and sufficient conditions for particular delegation sets to be optimal. Finally, we show that the optimal delegation set takes the form of a single interval if the agent's preferences are sufficiently similar to the principal's.

Keywords: Delegation; Decision rights; Mechanism design (search for similar items in EconPapers)
JEL-codes: D82 L23 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-bec and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Optimal Delegation (2008)
Working Paper: Optimal delegation (2008)
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