Theories of Delegation

We survey modern models of delegation that assume a boss and a subordinate pursue their own goals. Among the major themes covered are the following: the conditions under which the boss will prefer to delegate versus those in which she will prefer to retain authority; how a boss can induce a subordinate to truthfully reveal information; when rational principals will use the ally principle (i.e. delegate to agents with similar goals); delegation in repeated interactions; and how delegation can overcome commitment problems. These themes are relevant to a wide variety of institutions, affecting intralegislative organization, executive-legislative relations, and central banks.