Delegation and Communication under the Shadow of Future Reclaiming Authority
We compare delegation versus communication under the shadow of future reclaiming au-thority.We consider a two-period model:the principal delegates or communicates in the first period and makes decision afterwards.In the static model,Dessein(2002)shows that whenever communication is in-formative,delegation will strictly dominate communication.While in our two-period model if the principal reclaim authority in the second period,delegation in the first period may be less desirable than communi-cation.The delegation action turns out to be overbiased above both players'bliss points,which renders delegation less desirable.Moreover,higher discount factor leads to more overbiased delegation.
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