@inbook{68e74f05c4ec4f32932f38f2c1765901,
title = "Budgets under delegation",
abstract = "Consider a principal who sets a budget that the agent allocates among different services. Because the preferences of the agent may differ from those of the principal, the budget the principal sets can be lower or higher than in the first-best solution. When the principal is uncertain about the agent{\textquoteright}s preferences, the agent may choose an allocation that signals his type, thereby affecting the size of the budget the principal will set in the following period. The equilibrium may have separation or pooling. In a pooling equilibrium, the agent may mis-represent his preferences, aiming to get a large budget in the future period.",
keywords = "Budget process, Delegation, Signaling",
author = "Kimiko Terai and Amihai Glazer",
note = "Funding Information: Acknowledgements The authors thank Nobuo Akai, Takero Doi, Keisuke Hattori, Toshihiro Ihori, Shintaro Nakagawa, Shuhei Shiozawa, Shinichi Suda, and the seminar participants at Keio University and at the University of California, Irvine, for helpful comments and suggestions. In particular, comments by Keisuke Hattori on our Figs. 7.1, 7.2, 7.3 were most helpful in revising our graphical presentation. Financial support by the Seimeikai Foundation and a Grant-in-Aid for Scientific Research from the Ministry of Education, Culture, Sports, Science and Technology are gratefully acknowledged. Publisher Copyright: {\textcopyright} Springer Japan 2015.",
year = "2015",
doi = "10.1007/978-4-431-55127-0_7",
language = "English",
series = "Advances in Japanese Business and Economics",
publisher = "Springer",
pages = "167--192",
booktitle = "Advances in Japanese Business and Economics",
}