TY - JOUR
T1 - Decentralization and Collusion
AU - Baliga, Sandeep
AU - Sjöström, Tomas
PY - 1998/12
Y1 - 1998/12
N2 - We consider a model where agents work in sequence on a project, share information not available to the principal, and can collude. Due to limited liability the Coase theorem does not apply. The distribution of surplus among the agents is therefore an important control variable for the principal, which gives us a theory of how to delegate in an organization subject to moral hazard. The optimal distribution of surplus can always be achieved by delegating in the right way (decentralization) without using "message games."Journal of Economic LiteratureClassification Numbers: D23, D82, L14, L22.
AB - We consider a model where agents work in sequence on a project, share information not available to the principal, and can collude. Due to limited liability the Coase theorem does not apply. The distribution of surplus among the agents is therefore an important control variable for the principal, which gives us a theory of how to delegate in an organization subject to moral hazard. The optimal distribution of surplus can always be achieved by delegating in the right way (decentralization) without using "message games."Journal of Economic LiteratureClassification Numbers: D23, D82, L14, L22.
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U2 - 10.1006/jeth.1996.2462
DO - 10.1006/jeth.1996.2462
M3 - Article
AN - SCOPUS:0009886306
VL - 83
SP - 196
EP - 232
JO - Journal of Economic Theory
JF - Journal of Economic Theory
SN - 0022-0531
IS - 2
ER -