Reference : Delegation and Information Revelation
Scientific journals : Article
Business & economic sciences : Microeconomics
Delegation and Information Revelation
Gautier, Axel mailto [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Economie industrielle >]
Paolini, Dimitri [ > > ]
Journal of Institutional and Theoretical Economics = Zeitschrift für die Gesamte Staatswissenschaft
[en] signaling games ; delegation
[en] This paper analyzes, in a set-up where only the control over actions is contractible, the rationale for delegation. An organization must take two decisions. The payoffs are affected by a random parameter and only the agent knows its realization. If the principal delegates the control over the first decision to the agent, his choice may indicate the information that he possesses. If the principal retains control over the second decision, discovering this information is valuable. Hence, this paper provides a new rationale for delegation: A transfer of control to the informed party can be used to discover the private information. (JEL: D23, D82, L22 , M41)

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