CAHIER 14-2000 INNIS LECTURE 2000 : CAN THE THEORY OF INCENTIVES EXPLAIN DECENTRALIZATION? · 2000. 10. 23. · CAHIER 14-2000 INNIS LECTURE 2000 : CAN THE THEORY OF INCENTIVES EXPLAIN

CAHIER 14-2000

INNIS LECTURE 2000 :

CAN THE THEORY OF INCENTIVESEXPLAIN DECENTRALIZATION?

Michel POITEVIN

CAHIER 14-2000

INNIS LECTURE 2000 :

CAN THE THEORY OF INCENTIVESEXPLAIN DECENTRALIZATION?

Michel POITEVIN1

1 Centre de recherche et développement en économique (C.R.D.E.) and Département desciences économiques, Université de Montréal, and CIRANO

September 2000

__________________

The author would like to thank Chuck Blackorby for giving him the opportunity to deliver the 2000Innis Lecture (Canadian Economics Association, Vancouver, June 2000), he greatly benefited from thisexercise. He would also like to thank Frédérique Fell for her valuable research assistance. The authoracknowledges financial support from CRSH (Canada) and FCAR (Québec).

RÉSUMÉ

Cet article présente, dans un cadre unifié, un survol de trois théories de la

décentralisation de la prise de décision dans les organisations. Ces théories reposent sur

la présence d'information privée et des incitations qui en découlent. La renégociation, la

collusion et les limites à la communication représentent trois conditions suffisantes

pouvant expliquer l'optimalité de la décentralisation.

Mots clés : design organisationnel, information privée, décentralisation

ABSTRACT

This survey presents within a single model three theories of decentralization of

decision-making within organizations based on private information and incentives.

Renegotiation, collusion, and limits on communication are three sufficient conditions for

decentralization to be optimal.

Key words : organizational design, private information, decentralization

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CAHIER 14-2000 INNIS LECTURE 2000 : CAN THE THEORY OF INCENTIVES EXPLAIN DECENTRALIZATION? · 2000. 10. 23. · CAHIER 14-2000 INNIS LECTURE 2000 : CAN THE THEORY OF INCENTIVES EXPLAIN