Question
If the principal has P-formal authority she will try to be informed (expend effort E = c). With delegation she will not bother putting in
If the principal has P-formal authority she will try to be informed (expend effort E = c).
With delegation she will not bother putting in effort (E = 0). Ignoring her ex ante effort costs
E, the principal's expected return U
p
from P-formal authority and from delegation U
pd
are
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Business A Changing World
Authors: O. C. Ferrell, Geoffrey Hirt, Linda Ferrell
10th edition
1259179397, 978-1259179396
