Decision Sciences
4 years ago

Delegation in Contracts Often Inferior to Centralized Decision-Making, Study Finds.

Journal of Economics & Management Strategy
Contract Complexity, Incentives, and the Value of Delegation
Nahum D. Melumad, Dilip Mookherjee, Stefan Reichelstein

Paper Summary

Delegating decision-making in organizations may not always lead to better outcomes compared to centralized decision-making. The study explores the value of delegation when contracts have limits on the number of possible situations they can cover.

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