Obtaining Information by Diversifying Projects or Why Specialization is Inefficient
16 Pages Posted: 10 Jun 2008
Date Written: June 2008
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: Suggested Citation