Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330064 
Year of Publication: 
2023
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 14 [Issue:] 6 [Article No.:] 71 [Year:] 2023 [Pages:] 1-20
Publisher: 
MDPI, Basel
Abstract: 
In this paper, we investigate optimal delegation mechanisms in the presence of countervailing conflicts of interest in the context of principal-agent problems. We introduce two dimensions of conflict of interest-pandering incentives related to the outside option and project biases. We compare three delegation mechanisms: full delegation, veto-based delegation, and communication (no delegation). Contrary to conventional one-dimensional conflict models, our findings reveal a non-monotonic relationship between pandering incentives and bias. These conflicts counterbalance each other, resulting in a principal’s benefit from delegation not strictly decreasing with increased bias. Surprisingly, delegation to a biased agent can be advantageous in certain scenarios. This research sheds light on the complex dynamics of delegation mechanisms when confronted with countervailing conflicts of interest, offering insights into decision-making in principal-agent relationships.
Subjects: 
bias
delegation
pandering
principal-agent relationship
JEL: 
D78
D82
D83
L22
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.