Risk, delegation, and project scope
By: by Andreas Roider
Series: Discussion paper -- no. 3117; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 3117
Publisher: IZA
Published: 2007
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] /
Subjects: Risk; Delegation of powers
Description: "This paper studies a partial-contracting model where an agent may provide effort to increase a project's scope before some later decisions have to be taken. Consistent with existing empirical evidence, we find a positive relationship between exogenous risk and delegation. That is, we show that only if exogenous risk is sufficiently large, the risk-neutral principal may prefer to delegate authority over decisions to the risk-averse agent. Intuitively, for incentive reasons, the principal may optimally want to allow the agent to reduce his risk exposure. Nevertheless, even endogenous risk may be higher when the risk-averse agent has control"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 10/19/2007.

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