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Title:Monitoring your friends, not your foes: Strategic ignorance and the delegation of real authority PDF Logo
Authors:Dominguez-Martinez, Silvia
Sloof, Randolph
von Siemens, Ferdinand
Issue Date:2010
Series/Report no.:CESifo working paper: Labour Markets 3172
Abstract: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 information gathered by the worker, but also reduces the worker's incentives to gather information in the first place. Both effects of monitoring are influenced by the interest alignment between manager and worker. Our data confirms the theoretical predictions that optimal monitoring depends non-monotonically on the level of interest alignment. We also find evidence for hidden costs of control and preferences for control, but these have no substantial effects on organizational outcomes.
Subjects:delegation
real authority
strategic ignorance
JEL:D20
D40
D63
D82
J30
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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