Collusion and Delegation under Information Control

This paper studies how information control affects incentives for collusion and optimal organizational structures in principal-supervisor-agent relationships. I consider a model in which the principal designs the supervisor's signal on the productive agent's private information and the supervisor and agent may collude. I show that the principal optimally delegates the interaction with the agent to the supervisor if either the supervisor's budget is large or the value of production is small. The principal prefers direct communication with the supervisor and agent if the supervisor's budget is sufficiently small and the value of production is high

Robust Control and Monetary Policy Delegation.

This paper adapts in a simple static context the Rogoff's (1985) analysis of monetary policy delegation to a conservative central banker to the robust control framework. In this framework, uncertainty means that policymakers are unsure about their model, in the sense that there is a group of approximate models that they also consider as possibly true, and their objective is to choose a rule that will work under a range of di¤erent model specifications. We find that robustness reveals the emergence of a precautionary behaviour in the case of unstructured model uncertainty, reducing thus government's willingness to delegate monetary policy to a conservative central banker.Robust control, Monetary policy delegation, Central bank conservativeness.

Robust Control and Monetary Policy Delegation

This paper adapts in a simple static context the Rogoff's (1985) analysis of monetary policy delegation to a conservative central banker to the robust control framework. In this framework, uncertainty means that policymakers are unsure about their model, in the sense that there is a group of approximate models that they also consider as possibly true, and their objective is to choose a rule that will work under a range of di¤erent model specifications. We find that robustness reveals the emergence of a precautionary behaviour in the case of unstructured model uncertainty, reducing thus government's willingness to delegate monetary policy to a conservative central banker.Robust control; Monetary policy delegation; Central bank conservativeness.

Market Value Maximization through Strategic Delegation

In this paper, we develop a model of strategic delegation in which shareholders maintain an objective of market value maximization (MVM) of the firm's assets as measured by a capital asset pricing model (CAPM). Optimal delegation requires that managers maximize a linear combination of expected profits and firm values. An interesting feature of this model is that optimal delegation contracts of the MVM objective mitigate competition relative to standard price and quantity duopoly outcomes. In the MVM model, the delegation encourages managers to control systematic risk, which leads to greater market coordination, higher profits, and higher stock values. Impacts of degree of product differentiation on delegation under price and quantity competitions are also explored extensively. Our findings show that concerns about identifying the mode of competition are overstated in the literature.Market Value Maximization, Strategic Delegation, Quantity Competition, Price Competition, Product Differentiation, Marketing,

Delegation and Information Revelation

This paper addresses the question of delegation in a principal-agent setting with asymmetric information. If the person who has the power to act, the principal, doesn't have the necessary information to make the best possible decision, she can address herself to someone, the agent, who has this information. Such delegation of authority has its drawbacks given that the agent may not implement the principal's ideal decision. Delegation is costly for the principal. This cost is called the loss of control. But delegation has also its benefits. We show that delegation is useful to reduce the initial asymmetry of information between the principal and the agent. The benefits of delegation are linked to the information transmitted by the agent to the principal. To show this, we model an organization composed of one principal and one agent. The organization should take a sequence of decisions that are affected by a common environemental parameter. We assume that there is an initial asymmetry of information between the principal and the subordinate agent: the agent knows the state of the world while the principal has only some prior about its distribution. Moreover, we assume that the principal cannot use revelation techniques la Baron Myerson to elicit agent's superior information. In contrast, we adopt an incomplete contract framework and posit that the decision and the state of the world parameter cannot be contracted for. Therefore, the remaining contracting variable is the allocation of decision rights. With these simple contracts, we study how the agent's decision can signal his information to the principal. When the agent is in charge of a decision, his decision signals his information to the principal. The trade off between information transmitted through decisions under delegation and the associated loss of control is the heart of our analysis.

Authority and Incentives in Organizations

The paper analyzes the choice of organizational structure as solution to the trade-off between controlling behavior based on authority rights and minimizing costs for implementing high efforts. The analysis includes the owner of a firm, a top manager and two division heads. If it is more expensive to incentivize the division heads, the owner will prefer full delegation of authority to them to replace their high incentive pay by incentives based on private benefits of control. In that situation, decentralization is optimal given that selfish behavior is more important than cooperation for maximizing returns, but concentrated delegation of full authority to a single division head is optimal for cooperation being crucial. If, however, incentivizing the division heads is clearly less expensive than creating incentives for the top manager, the owner will choose centralization given that cooperation is the dominating issue, but partial delegation if selfish behavior is crucial

Delegation versus authority

The paper studies the role of delegation and authority within a principal-agent relation in which a non-contractible action has to be taken. The agent has private information relevant for the principal, but has policy preferences different from the principal. Consequently, an information revelation problem arises. We contribute to the literature by assuming transferable utility and contractibility of messages and decision rights. While delegation leads to loss of control, it facilitates the agent’s participation and leads to an informed decision. Moreover, message-contingent delegation creates incentives for information revelation. We derive the optimal contract for the principal and investigate when delegation outperforms authority. -- Das Papier untersucht die Bestimmungsgründe für die Delegation von Entscheidungen in Organisationen. Wir betrachten eine Prinzipal-Agent Beziehung, in der eine Entscheidung getroffen werden muss, die vertraglich nicht festgeschrieben werden kann. Der Agent verfügt über für den Prinzipal relevante private Information, hat aber andere Entscheidungspräferenzen als der Prinzipal. Im Unterschied zur bisherigen Literatur betrachten wir den Fall, dass Nutzen transferierbar ist, und dass der Prinzipal sein Entscheidungsrecht in Abhängigkeit eines Berichtes des Agenten an diesen abtreten kann. Delegation führt einerseits zu einem Kontrollverlust für den Prinzipal. Andererseits erleichtert sie die Partizipation des Agenten und führt zu einer informierten Entscheidung. Darüber hinaus schafft Delegation Anreize zur Informationsoffenlegung, wenn dem Agenten das Entscheidungsrecht in Abhängigkeit seines Berichtes übertragen wird. Wir untersuchen, wann es für den Prinzipal optimal ist, die Entscheidung zu delegieren.Delegation,Partial Contracting,Mechanism Design,Imperfect Commitment,Transferable Utility

A Note About the Semantics of Delegation

In many applications, mobile agents are used by a client to delegate a task. This task is usually performed by the agent on behalf of the client, by visiting various service provider's sites distributed over a network. This use of mobile agents raises many interesting security issues concerned with the trust relationships established through delegation mechanisms between client and agent, agent and service provider and client and service provider. In this paper we will explain why the traditional semantics of delegation used by existing access control mechanisms, either centralised or distributed, are generally not satisfactory to prevent and detect deception and why these problems are even more critical when these semantics are used in mobile agent paradigms.Non peer reviewe