Obtaining Information by Diversifying Projects or Why Specialization is Inefficient

16 Pages Posted: 10 Jun 2008

See all articles by Amihai Glazer

Amihai Glazer

University of California, Irvine - Department of Economics

Stef Proost

KU Leuven - Department of Economics

Date Written: June 2008

Abstract

We examine how diversification of projects assigned to an agency can enhance efficiency by informing a principal of the agency's quality. Projects that appear inefficient in isolation may be justified when assigned to the same agency. Assigning different tasks to different special purpose governments, though allowing for technical efficiency in the management of each project, may nevertheless reduce overall efficiency.

Keywords: Special purpose governments, Asymmetric information, Bureaucracy, Project evaluation

JEL Classification: D73, D83, H43

Suggested Citation

Glazer, Amihai and Proost, Stef V., Obtaining Information by Diversifying Projects or Why Specialization is Inefficient (June 2008). Available at SSRN: https://ssrn.com/abstract=1143243 or http://dx.doi.org/10.2139/ssrn.1143243

Amihai Glazer

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-854-6563 (Phone)
949-824-2182 (Fax)

Stef V. Proost (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)

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