search query: @indexterm complexity / total: 120
reference: 110 / 120
Author: | Melumad, N. Mookherjee, D. Reichelstein, S. |
Title: | Contract complexity, incentives, and the value of delegation |
Journal: | Journal of Economics and Management Strategy
1997 : SUMMER, VOL. 6:2, p. 257-289 |
Index terms: | CONTRACTS COMPLEXITY DELEGATION CENTRALISATION ORGANIZATIONS |
Language: | eng |
Abstract: | This article studies the value of delegation when organizations are constrained by a bound on the number of contingencies in any contracts. Delegation arrangements is frequently inferior to centralized decision making in settings where the revelation principle applies. For a principal agent setting with asymmetric information the article compares centralized mechanisms where the principal retains sole responsibility for contracting and coordinating with delegation mechanisms where a manager is delegated authority to contract with other agents and coordinate production. Delegation entails a control loss but allows decisions to be more sensitive to the manager's private information. The circumstances are identified under which delegation emerges superior to centralized contracting. |
SCIMA