Control and Incentives in Organizational Design
Posted: 5 Jul 1998
Date Written: January 1995
This paper is an attempt to set up a more general formulation of the principal-agent model that can accommodate these organizational situations, rather common in the world of business management, for the purpose of deriving useful propositions about both organizational design and the process of influencing the decisions made by agents on behalf of the principals. We will proceed as follows. We will describe the process of delegation of authority, and structure it along the lines of agency theory, we will examine the information requirements for decision-making, and their implications in the organizational context. We will establish the formal model of the problems we want to study, and we will explore the implications and consequences of such a model.
JEL Classification: C51
Suggested Citation: Suggested Citation