(Not) delegating decisions to experts: The effect of uncertainty

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Abstract

I construct a dynamic delegation model in which a principal can replace the agent to whom to delegate over time. Its unique feature is that the principal dynamically faces a choice between two types of agents with different multidimensional characteristics: experts with uncertain biases and non-experts with no bias. I investigate under what conditions the principal delegates to non-experts by focusing on the effect of the uncertainty regarding preference heterogeneity among experts. Its effect is different depending on the type of uncertainty: an increase in risk and in ambiguity (i.e., Knightian uncertainty) work in opposite directions with higher ambiguity rather than risk being a source of the delegation to non-experts. This analysis sheds new light on the sources of anti-elitism in politics.

Original languageEnglish
Article number105117
JournalJournal of Economic Theory
Volume190
DOIs
Publication statusPublished - Nov 2020

Keywords

  • Agency problems
  • Ambiguity
  • Dynamic delegation
  • Experts
  • Populism

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