TY  - BOOK
AU  - Arcuri,Alessandra
AU  - Dari‐Mattiacci, Giuseppe
TI  - Centralization versus decentralization as a risk-return trade-off
SN  - 00222186
AV  - HB73 JOU 
PY  - 2010///
CY  - Chicago
PB  - University of Chicago Press
KW  - Administrative agencies
KW  - Administrative law
KW  - Diversifiable risk
KW  - Drug regulation
KW  - Economic regulation
KW  - Expected returns
KW  - Food law
KW  - Jurisdiction
KW  - Risk aversion
N2  - This paper characterizes the choice between centralization and decentralization as a risk‐return trade‐off and examines it in a model that integrates ideas from committee decision‐making and portfolio theories. Centralization, by pooling expertise, rarely yields erroneous decisions; however, when it fails, the consequences are global. In contrast, in a decentralized system, erroneous decisions are more frequent, but their consequences are locally confined. We assess the relative desirability of (de‐)centralization in various scenarios with independent versus interdependent risks. We further discuss the robustness of the model and the relevance of our results for policymaking
UR  - https://doi.org/10.1086/599623
ER  -