The failure of the delegation principle in a principal-agent model with transfers
Franck Bien and
Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg
In a principal-agent model with monetary transfers, we show that the delegation principle always fails even if preferences are perfectly aligned. This result holds if (i) an action that is payoff-relevant for both the principal and the agent has to be taken even if the agent rejects the proposed contract and (ii) the principal can contractually extract surplus from the agent.
Keywords: Contract; Delegation; Information; Transfers. (search for similar items in EconPapers)
JEL-codes: D23 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-des, nep-hrm and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2022-14
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