Incentives, reputation and the allocation of authority

Englmaier, Florian; Filipi, Ales; Singh, Ravi

Incentives, reputation and the allocation of authority

Dateien

Englmaier.pdfGröße: 8.63 MBDownloads: 416

Datum

2010

Autor:innen

Englmaier, Florian

Filipi, Ales

Singh, Ravi

Open Access-Veröffentlichung

Open Access Green

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Zeitschriftenartikel

Publikationsstatus

Published

Erschienen in

Journal of Economic Behavior & Organization. 2010, 76(2), pp. 413-427. ISSN 0167-2681. Available under: doi: 10.1016/j.jebo.2010.06.011

Zusammenfassung

We address the question how much authority a principal should delegate to a manager with conflicting interests and uncertain ability in a context in which the manager has both compensation-based and reputational incentives. The optimal level of authority balances the value of the manager’s decision-making expertise against the cost of ensuring that the manager uses his discretion productively. Reputational incentives reduce the necessary monetary incentives to discourage purely opportunistic behavior, but may cause the manager to pursue conservative courses of action to preserve his reputation. This undermines the benefits of delegating control, leading to decreased managerial authority and stronger monetary incentives. When the principal contracts with the manager repeatedly, she delegates additional authority early in the relationship in order to screen for managers of high ability. Decentralization of decision making may thus occur even if the static benefits from decentralization are negative.

Fachgebiet (DDC)

330 Wirtschaft

Schlagwörter

Agency problems, delegation, compensation contracts, job design, career concerns, managerial conservatism

Zitieren

ISO 690

ENGLMAIER, Florian, Ales FILIPI, Ravi SINGH, 2010. Incentives, reputation and the allocation of authority. In: Journal of Economic Behavior & Organization. 2010, 76(2), pp. 413-427. ISSN 0167-2681. Available under: doi: 10.1016/j.jebo.2010.06.011

BibTex

@article{Englmaier2010Incen-12709,
  year={2010},
  doi={10.1016/j.jebo.2010.06.011},
  title={Incentives, reputation and the allocation of authority},
  number={2},
  volume={76},
  issn={0167-2681},
  journal={Journal of Economic Behavior & Organization},
  pages={413--427},
  author={Englmaier, Florian and Filipi, Ales and Singh, Ravi}
}

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