Delegation Versus Veto in Organizational Games of Strategic Communication

14 Pages Posted: 11 Dec 2007

See all articles by Anthony M. Marino

Anthony M. Marino

University of Southern California - Marshall School of Business

Date Written: 2006-10-13

Abstract

In organizations, principals use decision rules to govern a more informed agent's behavior. We compare two such rules: delegation and veto. Recent work suggests that delegation dominates veto unless the divergence in preferences between the principal and the agent is so large that informative communication cannot take place. We show that this result does not hold in a reasonable model of veto versus delegation. In this model, veto dominates delegation for any feasible divergence in preferences, if it induces the agent to shut down low quality proposals that he would otherwise implement and if such projects have sufficient likelihood.

Suggested Citation

Marino, Anthony M., Delegation Versus Veto in Organizational Games of Strategic Communication (2006-10-13). Journal of Public Economic Theory, Vol. 9, Issue 6, pp. 979-992, December 2007, Available at SSRN: https://ssrn.com/abstract=1067137 or http://dx.doi.org/10.1111/j.1467-9779.2007.00340.x

Anthony M. Marino (Contact Author)

University of Southern California - Marshall School of Business ( email )

Dept. of Finance & Business Economics
Los Angeles, CA 90089
United States
213-740-6525 (Phone)
213-740-6650 (Fax)

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