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Multinational and multiproduct firms often experience uncertainty in the relative return of conducting activities in different markets due to, for example, exchange rate volatility or the changing prospects of different products. We study how a multi-divisional organization should optimally allocate decision-making authority to its managerial members when operating in such volatile markets. To be able to adapt its decisions to local conditions, the organization has to rely on self-interested division managers to collect and disseminate the relevant information. We show that if communication takes the form of verifiable disclosure, then centralized decision-making does not suffer from information asymmetry and it allows the headquarter of the organization to better cope with the inter-market uncertainty. However, a downside of centralization is that it can discourage information acquisition, and this negative effect is amplified by the need for coordinating the activities of different divisions. As a result, the optimality of decentralized decisionmaking can actually be driven by a large coordination motive.

This article explains the emergence of an unique equilibrium resolution as the result of a compromise between two selves with different preferences. The stronger this difference is, the more generous the resolution gets. This result is in contrast to predictions of other models in which sinful consumption is distributed bimodally. Therefore, our result fits better with our daily observations concerning a lot of ambivalent goods where we often form nonrigid resolutions. The normative analysis uses the device of a hypothetical impartial self that regards both conflicting motives as equally legitimate. The result of this analysis is dilemmatic. It demonstrates that the resolution is broken too often to be welfare maximal. However, the introduction of external self-commitment devices results in their overuse and is welfare decreasing

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