{"id":5734,"date":"2023-03-03T13:17:01","date_gmt":"2023-03-03T13:17:01","guid":{"rendered":"https:\/\/aaep.org.ar\/?p=5734"},"modified":"2023-03-03T13:17:03","modified_gmt":"2023-03-03T13:17:03","slug":"multi-tier-hierarchies-an-incentive-approach","status":"publish","type":"post","link":"https:\/\/aaep.org.ar\/?p=5734","title":{"rendered":"Multi-tier hierarchies: an incentive approach"},"content":{"rendered":"<iframe loading=\"lazy\" class=\"wonderplugin-pdf-iframe\" src=\"https:\/\/aaep.org.ar\/wp-content\/plugins\/wonderplugin-pdf-embed\/pdfjslight\/web\/viewer.html?v=2&file=https:\/\/aaep.org.ar\/works\/works2022\/5.pdf\" width=\"100%\" height=\"600px\" style=\"border:0;\"><\/iframe>\n","protected":false},"excerpt":{"rendered":"<p>The main aim of this paper is to analyze the internal organization of a firm that comprises an Owner, a CEO, and two agents. The main inputs of our model are externalities among divisions\u2019 projects that may require cooperative decisions, costly effort from the CEO and the two division managers, and incomplete contracts on efforts and decisions. We focus on understanding the existence of more than two layers (i.e., three layers called hierarchical delegation) of decision authority in hierarchical organizations. Hierarchical delegation may arise as the best response to the moral hazard behavior of the CEO: as the CEO cannot commit to choose a cooperative decisions over projects, the most convenient organizational design for the firm may be to give a decision right over one project to an agent willing to choose a cooperative decision, generating an additional layer in the organization. The main contribution of this paper is to identify conditions that lead hierarchical delegation as optimal under an incentive perspective, but also to find the driving force of this result.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[29],"tags":[30],"class_list":["post-5734","post","type-post","status-publish","format-standard","hentry","category-anales","tag-aaep-anales-2022"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Multi-tier hierarchies: an incentive approach - Asociaci\u00f3n Argentina de Econom\u00eda Pol\u00edtica<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"es_ES\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Multi-tier hierarchies: an incentive approach - Asociaci\u00f3n Argentina de Econom\u00eda Pol\u00edtica\" \/>\n<meta property=\"og:description\" content=\"The main aim of this paper is to analyze the internal organization of a firm that comprises an Owner, a CEO, and two agents. The main inputs of our model are externalities among divisions\u2019 projects that may require cooperative decisions, costly effort from the CEO and the two division managers, and incomplete contracts on efforts and decisions. We focus on understanding the existence of more than two layers (i.e., three layers called hierarchical delegation) of decision authority in hierarchical organizations. Hierarchical delegation may arise as the best response to the moral hazard behavior of the CEO: as the CEO cannot commit to choose a cooperative decisions over projects, the most convenient organizational design for the firm may be to give a decision right over one project to an agent willing to choose a cooperative decision, generating an additional layer in the organization. The main contribution of this paper is to identify conditions that lead hierarchical delegation as optimal under an incentive perspective, but also to find the driving force of this result.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/aaep.org.ar\/?p=5734\" \/>\n<meta property=\"og:site_name\" content=\"Asociaci\u00f3n Argentina de Econom\u00eda Pol\u00edtica\" \/>\n<meta property=\"article:published_time\" content=\"2023-03-03T13:17:01+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-03T13:17:03+00:00\" \/>\n<meta name=\"author\" content=\"aaepolitica\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@aaepoficial\" \/>\n<meta name=\"twitter:site\" content=\"@aaepoficial\" \/>\n<meta name=\"twitter:label1\" content=\"Escrito por\" \/>\n\t<meta name=\"twitter:data1\" content=\"aaepolitica\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/aaep.org.ar\\\/?p=5734#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/aaep.org.ar\\\/?p=5734\"},\"author\":{\"name\":\"aaepolitica\",\"@id\":\"https:\\\/\\\/aaep.org.ar\\\/#\\\/schema\\\/person\\\/7150b747ba20875259c74b2cd177316c\"},\"headline\":\"Multi-tier hierarchies: an incentive approach\",\"datePublished\":\"2023-03-03T13:17:01+00:00\",\"dateModified\":\"2023-03-03T13:17:03+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/aaep.org.ar\\\/?p=5734\"},\"wordCount\":20,\"publisher\":{\"@id\":\"https:\\\/\\\/aaep.org.ar\\\/#organization\"},\"keywords\":[\"AAEP Anales 2022\"],\"articleSection\":[\"Anales\"],\"inLanguage\":\"es\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/aaep.org.ar\\\/?p=5734\",\"url\":\"https:\\\/\\\/aaep.org.ar\\\/?p=5734\",\"name\":\"Multi-tier hierarchies: an incentive approach - 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