When Should a Principal Delegate to an Agent in Selection Processes?

TL;DR

This paper analyzes when principals should delegate selection decisions to agents in high-stakes scenarios, considering costs, incentives, and signal quality to optimize utility, applicant quality, and fairness.

Contribution

It provides a stylized model characterizing conditions under which delegation improves decision outcomes in selection processes.

Findings

Delegation benefits depend on signal correlation and cost structure.

Principal's utility is maximized when delegation aligns incentives.

Fairness varies with signal quality disparities.

Abstract

Decision-makers in high-stakes selection processes often face a fundamental choice: whether to make decisions themselves or to delegate authority to another entity whose incentives may only be partially aligned with their own. Such delegation arises naturally in settings like graduate admissions, hiring, or promotion, where a principal (e.g. a professor or worker) either reviews applicants personally or decisions are delegated to an agent (e.g. a committee or boss) that evaluates applicants efficiently, but according to a potentially misaligned objective. We study this trade-off in a stylized selection model with noisy signals. The principal incurs a cost for selecting applicants, but can evaluate applicants based on their fit with a project, team, workplace, etc. In contrast, the agent evaluates applicants solely on the basis of a signal that correlates with the principal's metric, but this comes at no cost to the principal. Our goal is to characterize when delegation is beneficial versus when decision-making should remain with the principal. We compare these regimes along three dimensions: (i) the principal's utility, (ii) the quality of the selected applicants according to the principal's metric, and (iii) the fairness of selection outcomes under disparate signal qualities.