Repeated Delegation

59 Pages Posted: 22 Jan 2015 Last revised: 25 Sep 2019

See all articles by Elliot Lipnowski

Elliot Lipnowski

Columbia University

Joao Ramos

Marshall School of Business - University of Southern California

Date Written: September 20, 2019


In an ongoing relationship of delegated decision making, a principal consults a biased agent to assess projects' returns. In equilibrium, the principal allows future bad projects to reward fiscal restraint, but cannot commit to indefinite rewards. We characterize equilibrium payoffs (at fixed discounting), showing that Pareto optimal equilibria are implemented via a two-regime 'Dynamic Capital Budget'. Rather than facing backloaded rewards—as in dynamic agency models with commitment power—the agent loses autonomy as time progresses. This transition toward conservatism echoes the life cycle of an organization: as it matures, it generates lower revenue at a higher yield.

Keywords: delegation, limited commitment, repeated game, capital budgeting

JEL Classification: C73, D23, D82, D86, G31

Suggested Citation

Lipnowski, Elliot and Ramos, Joao, Repeated Delegation (September 20, 2019). Available at SSRN: or

Elliot Lipnowski

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Joao Ramos (Contact Author)

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

701 Exposition Boulevard, STE 205
Los Angeles, CA 90089-1422
United States


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