Abstract
We study an organization with a top management (principal) and multiple subunits (agents) with private information that determine the organization's aggregate efficiency. Under centralization, eliciting the agents' private information may induce the principal to manipulate aggregate information, which obstructs an effective use of information for the organization. Under delegation, the principal concedes more information rent, but is able to use the agents' information more effectively. The trade-off between the organizational structures depends on the likelihood that the agents are efficient. Centralization is optimal when such likelihood is low. Delegation, by contrast, is optimal when it is high.
Dokumententyp: | Paper |
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Keywords: | agency; aggregate information; organization design |
Fakultät: | Volkswirtschaft > Collaborative Research Center Transregio "Rationality and Competition" |
Themengebiete: | 300 Sozialwissenschaften > 330 Wirtschaft |
JEL Classification: | D82, D86 |
URN: | urn:nbn:de:bvb:19-epub-58117-6 |
Sprache: | Englisch |
Dokumenten ID: | 58117 |
Datum der Veröffentlichung auf Open Access LMU: | 27. Sep. 2018, 13:57 |
Letzte Änderungen: | 04. Nov. 2020, 13:37 |