Veto-Based Delegation

In a principal-agent model with hidden information and no monetary transfers, I establish the Veto-Power Principle: any incentive-compatible outcome can be implemented through veto-based delegation with an endogenously chosen default decision. This result demonstrates the exact nature of commitment powers required by the principal: (1) to design the default outcome and (2) to ensure that she has almost no formal control over the agent's decisions.

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Year of publication:	2005-01
Authors:	Mylovanov, Tymofiy
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	veto power \| asymmetric information \| principal-agent relationship \| no monetary transfers

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Extent:	application/pdf
Series:	Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems.
Type of publication:	Book / Working Paper
Classification:	D78 - Positive Analysis of Policy-Making and Implementation ; D82 - Asymmetric and Private Information ; L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration ; M54 - Labor Management (team formation, worker empowerment, job design, tasks and authority, job satisfaction)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005785896