In this laboratory experiment we study the use of strategic ignorance to delegate real authority within a firm. A worker can gather information on investment projects, while a manager makes the implementation decision. The manager can monitor the worker. This allows her to better exploit the...

This paper studies the costs and benefits of delegating decisions to superiorly informed agents relative to the use of rigid, non discretionary contracts. Delegation grants some flexibility in the choice of the action by the agent, but also requires the use of an appropriate incentive contract...

We address the question how much authority a principal should delegate to a manager with conflicting interests and uncertain ability in a context in which the manager has both compensation-based and reputational incentives. The optimal level of authority balances the value of the manager's...

We analyze the optimal ownership, delegation and compensation structures when a manager is hired to run a firm and to gather information on investment projects. The initial owner has two tasks: monitoring the manager and supervising project choice. Optimality would require a large ownership...

We examine the two-candidate equilibria of the citizen-candidate model when the implemented policy arises from a compromise between the government and an unelected external power. We show that the equilibria of this model differ significantly from the original: the distance between the...

This paper considers the effects of an interim performance evaluation on the decision of a principal to delegate authority to a potentially biased but better informed agent. Assuming the agents ́outside option to be determined by market beliefs about their type, interim evaluations (a) provide...

Using an agency model, we show how delegation, by generating additional private information, improves dynamic incentives under limited commitment. It circumvents ratchet effects and facilitates the revelation of persistent private information through two effects: a play-hardball effect, which...

Recruitment is often delegated to senior employees. Delegated recruitment, however, is vulnerable to moral hazard because senior employees may avoid recruiting the best candidates who could threaten their future seniority. We find that seniors will not deliberately choose bad candidates if the...

Companies typically control various aspects of their workers' behaviors. In this paper, we investigate whether the hierarchical distance of the superior who imposes such control measures matters for the workers' ensuing reaction. In particular, we test, in a laboratory experiment, whether...

We develop a model to discuss a government's incentives to delegate to bureaucrats the regulation of an industry. The industry consists of a polluting firm with private information about its production technology. Implementing a transfer-based regulation policy requires the government to make...