Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/177093 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11289
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
The existing delegation literature has focused on different preferences of principal and agent concerning project selection, which makes delegating authority costly for the principal. This paper shows that delegation has a cost even when the preferences of principal and agent are exogenously aligned. As application, the commitment effect of empowerment is considered, which has been addressed by the management and social psychology literature. In addition, it is shown that even in a setting without task commitment and other behavioral effects the principal might forgo delegation though being efficient.
Subjects: 
commitment
delegation
limited liability
moral hazard
renegotiation
JEL: 
D86
J33
J41
M5
Document Type: 
Working Paper

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