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The Dynamics of Delegated Decision Making

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  • Kevin Roberts

Abstract

This paper investigates the behaviour of bodies or organizations, operating in a stochastic environment, where there is a delegated decision maker.A crucial decision is when to delegate to another decision maker. The problem may be intrapersonal, as occurs when there are endogenously changing tastes, or interpersonal where delegation is intuitionally necessay or where decison making is 'as if' there is delegation. This is possible if decision making is through voting - an existence theorem is given. Decisions lead to shifts in control involving option losses; forward-looking recognition of this leads to the endogenous creation of hysteresis. The fact that the behaviour of other agents leads to hysteresis makes it optimal for any single agent to introduce more hysteresis. Organisations or bodies with many possible decision makers operate, in subsets of the state space, in one of two regimes, one where hysteresis is small and the other where hysteresis is large.

Suggested Citation

  • Kevin Roberts, 2013. "The Dynamics of Delegated Decision Making," Economics Series Working Papers 678, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:678
    as

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    References listed on IDEAS

    as
    1. Jack, William & Lagunoff, Roger, 2006. "Dynamic enfranchisement," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 551-572, May.
    2. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
    3. Benham, Lee & Keefer, Philip, 1991. "Voting in Firms: The Role of Agenda Control, Size and Voter Homogeneity," Economic Inquiry, Western Economic Association International, vol. 29(4), pages 706-719, October.
    4. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    5. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February.
    6. R. H. Strotz, 1955. "Myopia and Inconsistency in Dynamic Utility Maximization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(3), pages 165-180.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dynamic Voting; collective decisions; delegation; endogenous preferences; hysteresis;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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