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Elsevier, Economics Letters, 2(106), p. 137-139

DOI: 10.1016/j.econlet.2009.11.005

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How delegation improves commitment

Journal article published in 2010 by Grischa Perino ORCID
This paper is available in a repository.
This paper is available in a repository.

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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.