Delegation to a Group

Abstract: We study delegation to a group of career-concerned experts, who can acquire information of different, type-dependent accuracy. The alternative to delegation - consulting the experts individually - induces more acquisitions of costly information. However, the acquired information is better aggregated under delegation. Which of the two effects dominates, depends on the cost of information. We characterize this trade-off theoretically and test our model's predictions in an experiment. While most of them are confirmed, we also find that principals do not rely on groups as often as predicted. This result even holds when the group merely takes the role of an advisory committee and the principal keeps the decision power.