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Authority and Communication in Organizations (2002)
| Venue: | Review of Economic Studies |
| Citations: | 210 - 11 self |
BibTeX
@ARTICLE{Dessein02authorityand,
author = {Wouter Dessein and Patrick Rey and Jean Tirole and Abhijit Banerjee and Rob Gertner and Oliver Hart and Patrick Legros and Meg Meyer},
title = {Authority and Communication in Organizations},
journal = {Review of Economic Studies},
year = {2002},
pages = {811--838}
}
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Abstract
This paper studies delegation as an alternative to communication. We show that a principal prefers to delegate control to a better informed agent rather than to communicate with this agent as long as the incentive conßict is not too large relative to the principal’s uncertainty about the environment. We further identify cases in which the principal optimally delegates control to an ’intermediary’, and show that keeping a veto-right typically reduces the expected utility of the principal unless the incentive conßict is extreme. JEL ClassiÞcation: D23, D82.
