Delegation Versus Veto in Organizational Games of Strategic Communication

20 Pages Posted: 14 Jul 2006

See all articles by Anthony M. Marino

Anthony M. Marino

University of Southern California - Marshall School of Business

Date Written: July 5, 2006

Abstract

In organizations, principals use decision rules to govern a more informed agent's behavior. We compare two such rules: delegation and veto. Recent work suggests that delegation dominates veto unless the divergence in preferences between the principal and the agent is so large that informative communication can not take place. We show that this result does not hold in a reasonable model of veto versus delegation. In this model, veto dominates delegation for any feasible divergence in preferences, if it induces the agent to shut down low quality proposals that he would otherwise implement and if such projects have sufficient likelihood.

Keywords: veto, delegation

JEL Classification: L2

Suggested Citation

Marino, Anthony M., Delegation Versus Veto in Organizational Games of Strategic Communication (July 5, 2006). Available at SSRN: https://ssrn.com/abstract=914190 or http://dx.doi.org/10.2139/ssrn.914190

Anthony M. Marino (Contact Author)

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

Dept. of Finance & Business Economics
Los Angeles, CA 90089
United States
213-740-6525 (Phone)
213-740-6650 (Fax)

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