Delegation and Strategic Silence

53 Pages Posted: 20 Jun 2020 Last revised: 9 Sep 2020

See all articles by Akifumi Ishihara

Akifumi Ishihara

University of Tokyo - Institute of Social Science

Shintaro Miura

Kanagawa University

Date Written: September 6, 2020

Abstract

We consider an incomplete contracting model in which the decision process consists of the project choice and execution effort. Each party has an imperfectly informative private signal on the promising project and successful execution requires the agent’s effort. Revelation of the principal’s signal through her project choice may discourage the agent’s execution by denting his confidence that the project is promising. To avoid the discouragement, the principal prefers to rubber-stamp the agent’s recommendation about the project choice. However, due to the agent’s learning motive, he may be intentionally silent to prompt the principal to reveal her private signal through project choice. As a consequence, strategic silence may prevent informal delegation even when the principal has no incentive to overturn the agent’s proposal.

Keywords: Delegation, Choice and Execution, Confidence, Empowerment, Strategic Silence

JEL Classification: D23, D83, D86, M12

Suggested Citation

Ishihara, Akifumi and Miura, Shintaro, Delegation and Strategic Silence (September 6, 2020). Available at SSRN: https://ssrn.com/abstract=3609811 or http://dx.doi.org/10.2139/ssrn.3609811

Akifumi Ishihara (Contact Author)

University of Tokyo - Institute of Social Science

Hongo 7-3-1
Bunkyo
Tokyo, TOKYO 113-0033
Japan

Shintaro Miura

Kanagawa University ( email )

Kanagawa-ku, Yokohama City 221-8686
Japan

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