Delegation with a Reciprocal Agent

52 Pages Posted: 22 Sep 2016 Last revised: 12 May 2019

See all articles by Alessandro De Chiara

Alessandro De Chiara

Central European University (CEU) - Department of Economics; University of Barcelona; University of Barcelona - Barcelona Economic Analysis Team (BEAT)

Ester Manna

University of Barcelona

Date Written: May 5, 2019

Abstract

We consider a model in which a principal may delegate the choice of a project to a better informed agent. The preferences of the agent and the principal about which project should be undertaken may be discordant. Moreover, the agent benefits from being granted more discretion in the project choice and may be motivated by reciprocity. We find that the relationship between the agent's reciprocity and discretion crucially depends on the conflict of interest with the principal. When preferences are more congruent (discordant), discretion is broader (more limited) if the agent is more reciprocal. Hence, reciprocity mitigates (exacerbates) a mild (severe) conflict of interest. We also present supportive evidence for the predictions of our model using the German Socio-Economic Panel dataset.

Keywords: Authority, Delegation, Reciprocity

JEL Classification: D03, D82, D83, D86

Suggested Citation

De Chiara, Alessandro and Manna, Ester, Delegation with a Reciprocal Agent (May 5, 2019). Available at SSRN: https://ssrn.com/abstract=2841623 or http://dx.doi.org/10.2139/ssrn.2841623

Alessandro De Chiara

Central European University (CEU) - Department of Economics ( email )

Nador u. 9.
Budapest H-1051
Hungary

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

University of Barcelona - Barcelona Economic Analysis Team (BEAT) ( email )

Gran Via de les Corts Catalanes
Barcelona, 08007
Spain

Ester Manna (Contact Author)

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

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