Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/28048
Authors: 
Bester, Helmut
Krähmer, Daniel
Year of Publication: 
2006
Series/Report no.: 
Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft der Freien Universität Berlin 2007/1
Abstract: 
This paper analyses the relation between authority and incentives. It extends the standard principal / agent model by a project selection stage in which the principal can either delegate the choice of project to the agent or keep the authority. The agent's subsequent choice of e ort depends both on monetary incentives and the selected project. We nd that the consideration of e ort incentives makes the principal less likely to delegate the authority over projects to the agent. In fact, if the agent is protected by limited liability, delegation is never optimal.
Subjects: 
Authority
delegation
incentives
moral hazard
principal / agent problem
limited liability
JEL: 
D82
D8
ISBN: 
3938369493
Document Type: 
Working Paper

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