TY  - RPRT
        AU  - Alonso, Ricardo
AU  - Matouschek, Niko
        TI  - Relational Delegation
        PY  - 2005/Jan/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1454
        UR  - https://www.iza.org/index.php/publications/dp1454
        AB  - We explore the optimal delegation of decision rights by a principal to a better informed but biased agent. In an infinitely repeated game a long lived principal faces a series of short lived agents. Every period they play a cheap talk game ala Crawford and Sobel (1982) with constant bias, quadratic loss functions and general distributions of the state of the world. We characterize the optimal delegation schemes for all discount rates and show that they resemble organizational arrangements that are commonly observed, including centralization and threshold delegation. For small biases threshold delegation is optimal for almost all distributions. Outsourcing can only be optimal if the principal is sufficiently impatient. 
        KW  - delegation
KW  - relational contract
KW  - cheap talk
        ER  -