Affordable Access

Publisher Website

How delegation improves commitment

Authors
Publisher
Elsevier B.V.
Publication Date
Volume
106
Issue
2
Identifiers
DOI: 10.1016/j.econlet.2009.11.005
Keywords
  • Time-Inconsistency
  • Commitment
  • Delegation

Abstract

Abstract McCallum (1995, American Economic Review Papers and Proceedings 85 (2), 207-211) conjectures that delegation merely relocates the commitment problem but does not solve it. This holds if optimal ex-ante policies do not change if additional information becomes available. However, with a flexibility-credibility trade-off delegation improves credibility.

There are no comments yet on this publication. Be the first to share your thoughts.