The When and How of Delegated Search

• 成果类型: Article
• 署名作者: Zorc, Sasa; Tsetlin, Ilia; Hasija, Sameer; Chick, Stephen E.
• 署名单位: University of Virginia; INSEAD Business School; INSEAD Business School
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.2019.0498
• 发表日期: 2025
• 关键词: adverse selection model; principal-agent model; information acquisition; job search; CONTRACTS; ECONOMICS

摘要

Firms often outsource search processes, such as the acquisition of real estate, new technologies, or talent. To ensure the efficacy of such delegated search, firms need to carefully design incentive contracts to attenuate the ill effects of agency issues. We model this problem using a dynamic principal-agent framework, embedding the standard sequential search model. The optimal contract pays the agent a fixed per-period fee plus a bonus for finding a suitable alternative. The bonus size is defined a priori and decreases over time, whereas the range of values deemed suitable expands over time. If the principal is unable to contract on the value of the delivered alternatives, the optimal contract consists of two parts. Early in the search process, the agent is granted a small bonus for every alternative brought to the principal, irrespective of whether the principal accepts it; late in the search process, the agent is awarded a comparatively larger bonus, which is decreasing in time, but only if the principal accepts the alternative. We also consider situations where the principal chooses between searching in house and outsourcing. This decision is shown to hinge on the principal's trade-off between speed and quality. The age-old aphorism if you want it done right, do it yourself holds, as in-house search is optimal for a principal who prioritizes quality. Yet, in the context of our model, we also establish an addendum: If you want it done fast, hire someone else to do it.