Delegation of authority as an optimal (in)complete contract
By: by Andreas Roider.
Series: Discussion paper ;; no. 1298; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;; no. 1298
Publisher: IZA
Published: 2004
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Description: "The present paper aims to contribute to the literature on the foundations of incomplete contracts by providing conditions under which simple delegation of authority is the solution to the complete-contracting problem of the parties. We consider a hold-up framework where both parties profit from an investment that raises the value of an asset. Delegation turns out to be optimal if (i) the decision-dependent parts of the payoffs of the parties are linear in the asset value, and (ii) decisions have no investment-independent effect. If overinvestment might be an issue, delegation, however, with restricted competencies is optimal if some additional continuity requirements are met"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 5/3/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.