This paper incorporates the well-documented managerial optimism bias into a standard portfolio delegation problem to study its impact on investment strategies and the optimal incentive contract offered by the investor to the manager. It is shown that the optimistic manager trades a larger...

Fund managers in delegated portfolio management face asymmetries in their compensation contracts and in the fund flows contingent on their funds' performance relative to a benchmark. In this study we investigate the impacts of contract asymmetry and fund flow asymmetry on the risk-taking...

This article imports a behavioural perspective into a team context to study the effort-coordination problem among agents. Specifically, we investigate how the presence of optimism bias impacts the severity of the free-rider problem, the organizational structure of the team and the compensation...