Repeated Delegation
نویسنده
چکیده
A principal sequentially delegates project adoption decisions to an agent, who can assess project quality but has lower standards than the principal. In equilibrium, the principal allows bad projects in the future to incentivize the agent to be selective today. The optimal contract, termed Dynamic Capital Budgeting, comprises two regimes. First, the principal provides an expense account to fund projects and yields full discretion to the agent. The account accrues interest until hitting a cap. While the account grows, the agent is willingly selective. After enough projects, the second regime begins, and the agent loses his autonomy forever. JEL codes: C73, D23, D73, D82, D86, G31 ∗Email: [email protected] and [email protected] DelegationIsSuperCool This work has benefited from discussions with Heski Bar-Isaac, V. Bhaskar, Adam Brandenburger, Sylvain Chassang, Brendan Daley, Joyee Deb, Ross Doppelt, Ignacio Esponda, Eduardo Faingold, Johannes Hörner, R. Vijay Krishna, Vijay Krishna, Laurent Mathevet, David Pearce, Debraj Ray, Alejandro Rivera, Ariel Rubinstein, Evan Sadler, Maher Said, Tomasz Sadzik, Ennio Stacchetti, Alex Wolitzky, Chris Woolnough, Sevgi Yuksel, and seminar participants at New York University, EconCon, University of Waterloo, Midwest Economic Theory, and Canadian Economic Theory Conference. The usual disclaimer applies.
منابع مشابه
Delegation , Externalities and Organizational Design
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