Delegation in Organizations Under Incomplete Contracts : A Literature Survey

How to optimally allocate the initiation and ratification rights of an issue between the principal and agent? It is a question faced by all the managers of a hierarchy from the top to the bottom, which has not widely accepted answers. The theory of delegation under incomplete contracts focuses on the allocation of decision right in an organization with no transfers, which is of significance to understand such phenomenon as organization structure, authority allocation and performance of governance in a firm or government. This theory has also been applied to fields like administrative and legislative procedure and corporate governance. This article differentiates the research of delegation from the mechanism design and new property rights at first. Based on the analytical framework, the paper then surveys the research on the value and form of delegation and its extensions