Members of an organization have conflicting preferences. Principal-agent theory analyzes how and under which conditions this conflict can be resolved by means of incentives. In this paper we discuss an alternative to incentives: the engineering of delegation. The principal can divide the organizational decision making problem into subproblems and appropriately delegate different subproblems to different agents, letting them free to act according to their individual preferences. We introduce a formal model which analyzes whether and under which conditions the principal can in this way obtain the decisions she prefers without manipulating incentives nor using authority to overrule what agents autonomously decide.
Divide and conquer: the engineering of delegation
Settepanella, Simona
First
;
2022-01-01
Abstract
Members of an organization have conflicting preferences. Principal-agent theory analyzes how and under which conditions this conflict can be resolved by means of incentives. In this paper we discuss an alternative to incentives: the engineering of delegation. The principal can divide the organizational decision making problem into subproblems and appropriately delegate different subproblems to different agents, letting them free to act according to their individual preferences. We introduce a formal model which analyzes whether and under which conditions the principal can in this way obtain the decisions she prefers without manipulating incentives nor using authority to overrule what agents autonomously decide.
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