Template-Type: ReDIF-Paper 1.0
Title: Delegation of Authority as an Optimal (In)complete Contract
Author-Name: Andreas Roider
Author-Email: 
Classification-JEL: D82, D23, L14, L22
Keywords: delegation, decentralization, authority, incomplete contracts, holdup, property rights
Abstract: 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.
Note: 
Length: 21
Creation-Date: 2003-05
Revision-Date: 2004-08
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse8_2003.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse8_2003