Managerial Optimism and Investment Choice

This paper analyzes whether it might be desirable for a firm to hire an overoptimistic manager to commit to a certain R&D strategy. I consider a Cournot model with an ex-ante R&D stage where firms can invest in cost reduction before product market competition takes place. I show that firms want to hire overoptimistic managers and argue that a manager's type may serve as a substitute for strategic delegation via contracts. © 2010 John Wiley & Sons,Ltd.

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Year of publication:	2010
Authors:	Englmaier, Florian
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München

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Series:	Munich Reprints in Economics.
Type of publication:	Book / Working Paper
Notes:	Published in Managerial and Decision Economics 4 31(2010): pp. 303-310
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011093729