Obtaining information by diversifying projects or why specialization is inefficient

Amihai Glazer and Stef Proost

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: We examine how diversification of projects assigned to an agency can enhance efficiency by informing a principal of the agency’s quality. Projects that appear inefficient in isolation may be justified when assigned to the same agency. Assigning different tasks to different special purpose governments, though allowing for technical efficiency in the management of each project, may nevertheless reduce overall efficiency.

Keywords: Special purpose governments; Asymmetric information; Bureaucracy; Project evaluation (search for similar items in EconPapers)
JEL-codes: D73 D83 H43 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-cta and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces0815

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