Delegation, Committees, and Managers

Posted: 19 May 2006

See all articles by Birger Wernerfelt

Birger Wernerfelt

Massachusetts Institute of Technology (MIT) - Sloan School of Management

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Abstract

Attempts to economize on decision-making time imply that groups of peers may delegate authority to a small committee of managers even though this means that the information and preferences of the uninvolved players are neglected. Decisions are more likely to be delegated to players with better information and more representative preferences. The possibility of ex post protests may force managers to take the preferences of others into account but may also give them incentives to ignore their private information. The argument may explain employees' willingness to let bosses decide, and thus throw some light on the theory of the firm.

Keywords: Delegation, Committees, Managers, Firms

JEL Classification: D2, L2

Suggested Citation

Wernerfelt, Birger, Delegation, Committees, and Managers. Journal of Economics and Management Strategy, Vol. 16, 2007. Available at SSRN: https://ssrn.com/abstract=903241

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