Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/221566
Authors: 
Baliga, Sandeep
Sjostrom, Tomas
Year of Publication: 
1998
Series/Report no.: 
Discussion Paper No. 1210
Abstract: 
We consider a model where agents work in sequence on a project, share information not available to the principal, and can collude. Due to limited liability the Coase theormem does not apply. The distribution of surplus among the agents is there an important control variable for the principal, which gives us a theory of how to delegate in an organization subject to moral hazard. The optimal distribution of surplus can always be achieved by delegating in the right way (decentralization) without using "message games" (centralization).
Document Type: 
Working Paper

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