Spatial Models of Delegation

canonical assumptions. This approach may be justified on grounds of tractability, but the failure to grasp the significance of different assumptions and push beyond specific models has limited our understanding of the incentives for delegation. Consequently, the justifications for delegation that have received recent scrutiny and testing differ from some of the more plausible justifications offered by informal studies of delegation. We show that surprisingly few results in the literature hinge on risk aversion, and surprisingly many turn on the ignored, though equally canonical, technological assumption that uncertainty is fixed (relative to policies). Relaxing the key assumptions about dimensionality and functional forms provides a clearer intuition about delegation-one that is closer to classical treatments. The theory allows us to relate different institutional features (commitment, specialization costs, monitoring, multiple principals) to delegation's observable properties. lthough the practice of delegation dates back to antiquity-the Book of Exodus refers to itonly in the last century has much scholarship examined its causes and effects, and only recently has research focused on developing and testing formal theories that explore the logic of delegation.1 Despite this recent surge in formal work on delegation, scholars have failed to generalize several important properties of the early pathbreaking models. Instead of revisiting assumptions that were initially imposed for the sake of convenience, recent papers tend to maintain and reinforce the cannonical assumptions, applying these limited models to ever-richer institutional settings. Although the breadth of understanding about delegation across various settings is impressive, this approach has come at a price. It has produced an understanding that only partly captures delegation's informational rationale in even the simplest contexts. The literature is rich in predictions about delegation in complicated institutional settings when stylized foundational assumptions are satisfied but poor in explanations for and intuitions about why a poorly informed boss chooses to delegate to subordinates with different preferences. Moreover, we lack an understanding of what basic features drive the boss's choice of which agent is given control of policy. For example, scholars have provided detailed explanations about how separation of power systems affect delegation by legislatures to agencies, but the basic question "Does the informational rationale for delegation hinge on the boss's risk preferences?" has been ignored. Despite the analysis of complicated signaling and screening games between bosses with ex post controls and their subordinates, we do not yet understand when or why the ally principle (the boss picks the most ideologically similar agent as delegatee) fails in simple settings. We try to put models of delegation on more solid footing by examining a larger (more general) set of environments. We eschew the canonical assumptions of quadratic utility (or even risk aversion), unidimensional outcome spaces, and additive and homogeneous random shocks to policy. Our analysis focuses first on two basic questions: When does delegation occur? and To whom does the boss delegate? We then consider richer, institutionally driven extensions, e.g., the role of commitment and monitoring devices, the impact of multiple bosses, and the institution in which their preferences are aggregated. Through a sequence of nested models with varying levels of abstraction, the analysis isolates the relations between various assumptions and different findings.