Commitment in R&D tournaments via strategic delegation to overoptimistic managers
Managerial and Decision Economics2010Vol. 32(1), pp. 63–69
Citations Over TimeTop 14% of 2010 papers
Abstract
This paper shows that it is profitable for a firm to hire an overoptimistic manager to commit to a certain investment strategy in an R&D tournament situation. In the unique symmetric equilibrium, all firms delegate to overoptimistic managers, where the optimal degree of overoptimism depends on the riskiness of the tournament. In these situations a manager's type may serve as a substitute for delegation via contracts. By delegating to overoptimistic managers, firms can escape the rat race nature of R&D tournaments. Copyright © 2010 John Wiley & Sons, Ltd.
Related Papers
- → A General Theory of Delegation, Accountability and Empowerment(1997)9 cited
- → Accountability and delegation explained(2014)3 cited
- → Managerial delegation in monopoly and social welfare(2014)3 cited
- Ineffective delegation--symptom or problem(1985)
- Empowerment and the Dark Side of Delegation(2018)