Risk and decentralization in the theory of economic policy |
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Authors: | M.A. Grove |
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Affiliation: | University of Oregon, Eugene, OR 97403, U.S.A. |
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Abstract: | In this note, uncertainty is incorporated into Tinbergen's model of economic policy. If the Central Planning Authority's preferences amomg subjective probability distributions can be described by a von Neumann-Morgenstern utility function, and if certain restrictions are imposed on these probability distributions, then the Authority can delegate control over partitions of the instrument vector to its Agencies and so decentralize its decision process. |
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