Relational delegation

Ricardo Alonso*, Niko Matouschek

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

47 Scopus citations


We analyze a cheap talk game with partial commitment by the principal. We first treat the principal's commitment power as exogenous and then endogenize it in an infinitely repeated game. We characterize optimal decision making for any commitment power and show when it takes the form of threshold delegation-in which case the agent can make any decision below a threshold-and centralization-in which case the agent has no discretion. For small biases, threshold delegation is optimal for any smooth distribution. Outsourcing can only be optimal if the principal's commitment power is sufficiently small.

Original languageEnglish (US)
Pages (from-to)1070-1089
Number of pages20
JournalRAND Journal of Economics
Issue number4
StatePublished - 2007

ASJC Scopus subject areas

  • Economics and Econometrics


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