%0 Report
        %A Roider, Andreas
        %T Delegation of Authority as an Optimal (In)complete Contract
        %D 2004
        %8 2004 Sep
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 1298
        %U https://www.iza.org/publications/dp1298
        %X The present paper aims to contribute to the literature on the foundations of incomplete contracts by providing conditions under which simple delegation of authority is the solution to the complete-contracting problem of the parties. We consider a hold-up framework where both parties profit from an investment that raises the value of an asset. Delegation turns out to be optimal if (i) the decision-dependent parts of the payoffs of the parties are linear in the asset value, and (ii) decisions have no investment-independent effect. If overinvestment might be an issue, delegation, however, with restricted competencies is optimal if some additional continuity requirements are met.
        %K hold-up
%K delegation
%K decentralization
%K authority
%K property rights
%K incomplete contracts