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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Delegation and value creation
Organization Unit
  • Stephan Nüesch
  • English
Institution University of Zurich
Series Name University of Konstanz, Working Paper Series
Number 13
Number of Pages 38
Date 2013
Abstract Text Many  scholars  argue  that  the  delegation  of  decision  rights  to  independent  institutions  promotes trust and specific investments. We test this conjecture with variations of the trust game in which the back transfer decision is delegated to a third party. A randomly chosen third  party  with  a  fixed  payment  induces  larger  investments  over  time  although  the  experimental design rules out reputation building. Changes in the third party’s selection procedure  eliminate  this  benefit.  If  the  third  party  gets  a  reward  for  the  appointment,  delegation actually destroys trust. Investors (unwarrantedly) fear a diffusion of responsibility and lower back transfers in this case.
Other Identification Number merlin-id:8675
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