Budgets under delegation

Kimiko Terai, Amihai Glazer

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Citation (Scopus)

Abstract

Consider a principal who sets a budget that the agent allocates among different services. Because the preferences of the agent may differ from those of the principal, the budget the principal sets can be lower or higher than in the first-best solution. When the principal is uncertain about the agent’s preferences, the agent may choose an allocation that signals his type, thereby affecting the size of the budget the principal will set in the following period. The equilibrium may have separation or pooling. In a pooling equilibrium, the agent may mis-represent his preferences, aiming to get a large budget in the future period.

Original languageEnglish
Title of host publicationAdvances in Japanese Business and Economics
PublisherSpringer
Pages167-192
Number of pages26
DOIs
Publication statusPublished - 2015 Jan 1

Publication series

NameAdvances in Japanese Business and Economics
Volume8
ISSN (Print)2197-8859
ISSN (Electronic)2197-8867

Keywords

  • Budget process
  • Delegation
  • Signaling

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Economics and Econometrics
  • Finance

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