Program
Subjects
Works
Book Types
Back to issue
Cover of: Delegation and Opportunism
Kouroche Vafaï

Delegation and Opportunism

Section: Articles
Volume 160 (2004) / Issue 3, pp. 498-521 (24)
Published 09.07.2018
DOI 10.1628/0932456041960542
  • article PDF
  • available
  • 10.1628/0932456041960542
Due to a system change, access problems and other issues may occur. We are working with urgency on a solution. We apologise for any inconvenience.
Summary
We analyze the effect of opportunism on organizational structure. In our moralhazard environment, a principal chooses between a principal-agent organization where the principal itself monitors the output produced by the agent, and a principal-supervisor-agent hierarchy where monitoring is delegated. We find that as long as only one form of opportunism may take place in a principal-supervisor- agent hierarchy, this structure dominates a principal-agent organization. We then show that when multiple forms of opportunism may occur in a principal-supervisor-agent hierarchy, this structure may strictly be dominated by a principal- agent organization.