TY  - RPRT
        AU  - Roider, Andreas
        TI  - Delegation of Authority as an Optimal (In)complete Contract
        PY  - 2004/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1298
        UR  - https://www.iza.org/publications/dp1298
        AB  - 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.
        KW  - hold-up
KW  - delegation
KW  - decentralization
KW  - authority
KW  - property rights
KW  - incomplete contracts
        ER  -