## Hierarchy and Authority in a Dynamic Perspective: A Model Applied to Donor Financing of NGO Proposals

_IMF Working Papers, July 1, 2003_

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## Bibliographic details
- Authors: Boriana Yontcheva
- Published: July 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451857511.001

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### Summary
- This paper presents a dynamic game of strategic delegation between a principal and an agent.
- The principal can choose between two organizational designs:
  - a traditional hierarchy where she retains authority over the choice of projects to be implemented; or
  - a delegation where she allows her agent to select the project.
- Key objectives:
  - identify the long-run determinants of the principal’s choice; and
  - verify the impact of the authority allocation on the agent’s effort levels and on the principal’s payoffs.
- Application: relationships between institutional donors and nongovernmental organizations.

### Model and Objectives
- Dynamic game of strategic delegation between a principal and an agent.
- Organizational designs considered:
  - Hierarchy: principal retains authority over project choice.
  - Delegation: agent selects the project.
- Focus areas:
  - agent's choice, agent's effort, agent's expertise, agent's initiative, agent's preference;
  - principal-agent issues and principal-agent relationship;
  - strategic delegation and dynamic games.

### Application to Donor–NGO Relationships
- The model is applied to institutional donors and nongovernmental organizations (NGOs) to study how authority allocation affects:
  - effort of the agent;
  - principal’s payoffs;
  - long-run organizational design choices by principals (donors).

### Findings, Themes, and Keywords
- Primary themes and subject areas:
  - Asset and liability management, Debt limits, Economic sectors, Financial institutions, Nongovernmental organizations, Project loans.
- Keywords included in the paper:
  - agent's choice, agent's effort, agent's expertise, agent's initiative, agent's preference, Debt limits, development aid, dynamic games, Eastern Europe, effort of the agent, hierarchies, NGOs, Nongovernmental organizations, principal-agent issues, principal-agent relationship, Project loans, strategic delegation, WP.

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