The internal organization of large firms as well as procurement and regulation contexts frequently involve a hierarchical nexus of contracts, with substantial delegation of decision making across layers. Such hierarchical delegation of decision making creates problems of aligning incentives of...

Agents in a hierarchy are commonly delegated authority to communicate and contract with agents at lower levels. While delegation reduces the burden of communication and information processing on the principal, it also introduces additional incentive problems. We find that with sufficient...

In settings where the revelation principle applies, delegation arrangements are frequently inferior to centralized decision making, and at best achieve the same level of performance. This paper studies the value of delegation when organizations are constrained by a bound on the number of...

Consider the problem of Bayesian implementation, i.e., of constructing mechanisms with the property that all Bayesian equilibrium outcomes agree with a given choice rule. The authors show that a general procedure is to start with an incentive-compatible revelation mechanism, and then augment...

It is common practice for firms to pool their expertise by forming parterships such as joint ventures and strategic alliances. A Central organizational problem in such parterships is that managers may behave noncooperatively in order to advance the interests of their parent firms. We ask whether...