Commitment in R&D tournaments via strategic delegation to overoptimistic managers
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.
Year of publication: |
2011
|
---|---|
Authors: | Englmaier, Florian |
Institutions: | Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München |
Saved in:
Saved in favorites
Similar items by person
-
Free Riding in the Lab and in the Field
Englmaier, Florian, (2010)
-
Worker characteristics and wage differentials: Evidence from a gift-exchange experiment
Englmaier, Florian, (2014)
-
Contractual and organizational structure with reciprocal agents
Englmaier, Florian, (2012)
- More ...