Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39784
Authors: 
Kuhn, Michael
Gundlach, Erich
Year of Publication: 
2006
Series/Report no.: 
Thünen-series of applied economic theory 69
Abstract: 
We consider resource allocation within an organisation and show how delegation bears on moral hazard and adverse selection when agents have a preference for autonomy. Agents may care about autonomy for reasons of job-satisfaction, status or greater reputation when performing well under autonomy. Separating allocations (overall budget and degree of delegation) are characterised depending on the preference for autonomy. As the latter increases, the degree of delegation assigned to productive and unproductive agents converges. If agents' preferences for monetary rewards are weak, the principal will not employ financial transfers. Pooling then arises under a strong preference for autonomy.
Subjects: 
adverse selection
capital budgeting
delegation
intrinsic motivation
moral hazard
JEL: 
D82
G31
Document Type: 
Working Paper

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