The allocation of authority in organizations: a field experiment with bureaucrats

Oriana Bandiera, Michael Best, Adnan Khan and Andrea Prat

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives in a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. Time use data reveal agents' responses vary along the same margin: autonomy increases the time devoted to procurement, and this leads to lower prices only when monitors cause delays. By contrast, incentives work when monitors do not cause delays. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.

Keywords: IGC 37118-PAK; IGC 1-VCS-VPAK-VXXXX-37208 (search for similar items in EconPapers)
JEL-codes: D02 D73 H57 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2021-11-01
New Economics Papers: this item is included in nep-exp and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published in American Economic Review: Insights, 1, November, 2021, 136(4), pp. 2195 – 2242. ISSN: 2640-2068

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http://eprints.lse.ac.uk/111840/ Open access version. (application/pdf)

Related works:
Journal Article: The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats* (2021)
Working Paper: The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats (2020)
Working Paper: The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:111840

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