Adnan Khan, LSE-ICG

Sala de Postgrado

“The Allocation of Authority in Organizations: A Field Experiment with Bureaucrat”

Coautoreado con Oriana Bandiera, Michael Best y Andrea Prat

Abstract: We design a field experiment to study the allocation of authority in organizations where autonomy leverages the agents’ private information and rules prevent them from extracting private benefits. A simple model illustrates that monitoring of adherence to rules creates a second set of agents subject to their own agency problems, and hence the optimal allocation of authority and incentives depends on the relative alignment of frontline workers and their monitors with organizational goals. The experiment, run with the government of Punjab, Pakistan, creates exogenous variation in the autonomy and incentives of 600 procurement officers. We find that increasing procurement officers’ autonomy vis-à-vis their auditors reduces prices by 9% without reducing quality and the effect is stronger when the auditor is more extractive. In contrast, performance pay only reduce prices when the auditor is not extractive and is close to zero on average. The results suggest auditors are less concerned with saving public money than procurement officers are. This has implications for organizational design and anti-corruption policies.