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dc.contributor.authorEllison, Glenn
dc.contributor.authorHolden, Richard
dc.date.accessioned2015-04-23T20:11:53Z
dc.date.available2015-04-23T20:11:53Z
dc.date.issued2013-11
dc.identifier.issn8756-6222
dc.identifier.issn1465-7341
dc.identifier.urihttp://hdl.handle.net/1721.1/96770
dc.description.abstractThis article develops a model with endogenously coarse rules. A principal hires an agent to take an action. The principal knows the optimal state-contingent action, but cannot communicate it perfectly due to communication constraints. The principal can use previously realized states as examples to define rules of varying breadth. We analyze how rules are chosen under several assumptions about how rules can be amended. We explore the inefficiencies that arise and how they depend on the ability to refine rules, the principal’s time horizon and patience, and other factors. Our model exhibits path dependence in that the efficacy of rule development depends on the sequence of realizations of the state. We interpret this as providing a foundation for persistent performance differences between similar organizations and explore the role of different delegation structures in ameliorating the effects of bounded communication.en_US
dc.description.sponsorshipSloan School of Management (Program on Innovation in Markets and Organizations)en_US
dc.description.sponsorshipNational Science Foundation (U.S.) (SES-0550897)en_US
dc.language.isoen_US
dc.publisherOxford University Pressen_US
dc.relation.isversionofhttp://dx.doi.org/10.1093/jleo/ewt016en_US
dc.rightsCreative Commons Attribution-Noncommercial-Share Alikeen_US
dc.rights.urihttp://creativecommons.org/licenses/by-nc-sa/4.0/en_US
dc.sourceEllison via Kate McNeillen_US
dc.titleA Theory of Rule Developmenten_US
dc.typeArticleen_US
dc.identifier.citationEllison, G., and R. Holden. “A Theory of Rule Development.” Journal of Law, Economics, and Organization 30, no. 4 (November 25, 2013): 649–682.en_US
dc.contributor.departmentMassachusetts Institute of Technology. Department of Economicsen_US
dc.contributor.approverEllison, Glennen_US
dc.contributor.mitauthorEllison, Glennen_US
dc.relation.journalJournal of Law, Economics, and Organizationen_US
dc.eprint.versionAuthor's final manuscripten_US
dc.type.urihttp://purl.org/eprint/type/JournalArticleen_US
eprint.statushttp://purl.org/eprint/status/PeerRevieweden_US
dspace.orderedauthorsEllison, G.; Holden, R.en_US
dc.identifier.orcidhttps://orcid.org/0000-0003-3164-0855
mit.licenseOPEN_ACCESS_POLICYen_US
mit.metadata.statusComplete


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