Microtheory Seminar Series. Delegation and Decision Process in Organizations
Professor Hideshi Itoh, Waseda University.
"Delegation and Decision Process in Organizations"
Tuesday, 14 March. 4 pm
Room 305 Main Building
We study a three-stage decision process that consists of information acquisition, project choice, and execution of the selected project. There are a principal and an agent whose ``favourite'' projects are different, and each receives a higher private benefit from the success of the favourite one than that of the other. The principal is more ``biased'' toward her favourite project. The agent is responsible for the first and third stages, and at the beginning of the relationship, the principal decides and commits herself to the allocation of the right to choose a project to herself or to the agent. We show that (i) under some conditions, it is optimal for the principal to delegate the authority over project choice to the agent and give him complete control over the decision process; (ii) delegation may be more likely to be optimal than when the principal and the agent have the same favourite project; and (iii) the principal always chooses to retain the authority under the reduced, two-stage decision process where either the information acquisition stage or the execution stage is exogenously fixed.
Hideshi has been a Professor of Organizational Economics at the Graduate School of Business & Finance (a.k.a. Waseda Business School), Waseda University, since 2017. Prior to joining WBS, he served as professor at Kyoto University, Osaka University, and Hitotsubashi University. He was visiting professors at the University of California at San Diego, Stanford University, and Columbia University and visiting researchers at CESifo and UNSW. He received MA and BA in commerce from Hitotsubashi University and PhD in decision sciences from Stanford University. He has widely published in academic journals in the field of organizational economics and contract theory. He is the 2003 recipient of the Nakahara Prize from the Japanese Economic Association. He is an Executive Board Member of the Japan Law and Economics Association and the President of the Japanese Economic Association (2022-2023).
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First published: 7 March 2023