Delegation and Value Creation

Eisenkopf, Gerald; Nüesch, Stephan

Delegation and Value Creation

Files

Eisenkopf_0-275434.pdf(831.18 KB)

Date

2013

Authors

Eisenkopf, Gerald

Nüesch, Stephan

Series

Working Paper Series / Department of Economics; 2013-13

Publication type

Working Paper/Technical Report

Abstract

Many scholars argue that the delegation of decision rights to independent institutions promotes trust and specific investments. We test this conjecture with variations of the trust game in which the back transfer decision is delegated to a third party. A randomly chosen third party with a fixed payment induces larger investments over time although the experimental design rules out reputation building. Changes in the third party’s selection procedure eliminate this benefit. If the third party gets a reward for the appointment, delegation actually destroys trust. Investors (unwarrantedly) fear a diffusion of responsibility and lower back transfers in this case.

Subject (DDC)

330 Economics

Cite This

ISO 690

EISENKOPF, Gerald, Stephan NÜESCH, 2013. Delegation and Value Creation

BibTex

@techreport{Eisenkopf2013Deleg-29729,
  year={2013},
  series={Working Paper Series / Department of Economics},
  title={Delegation and Value Creation},
  number={2013-13},
  author={Eisenkopf, Gerald and Nüesch, Stephan}
}

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