Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94036
Authors: 
Li, Jianpei
Wu, Yanhui
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 211
Abstract: 
We formalize a conception of authority, which is commonly defined as the right of controlling a person's actions embedded in human assets in sociology. Due to the inalienable property of human assets, the contractible formal authority is hard to verify and enforce, while real authority usually diverges from formal authority. Inefficiency tends to arise when a task is not routine or can not be done by a robot. Using a framework of incomplete contract, we show that allocation of formal authority, as an instrument to mitigate the inefficiency, is determined by features of tasks and specificity of assets, and the relationship between the resources. Monitoring is then introduced to fine tune value of delegation.
Subjects: 
Transaction of human assets
real authority
formal authority
delegation
monitor
JEL: 
D23
J24
J41
L22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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