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Managers as administrators: reputation and incentives

Dasgupta, Amil and Sarafidis, Yianis (2009) Managers as administrators: reputation and incentives. Journal of Economic Behavior and Organization, 70 (1-2). pp. 155-163. ISSN 0167-2681

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Abstract

In many firms managers play the role of administrators, adding value by successfully implementing solutions to problems that the firm may face. We model the career concerns of administrators. When administrators receive the same information but differ in their administrative abilities, we show that they may not choose tasks that are appropriate for the problems they face. In particular, in any pure strategy equilibrium of our model, administrators do not condition their behavior on any of their private information, despite the fact that they are risk neutral and know their administrative ability. We thus identify a novel source of incentive conflicts in firms. We also examine the robustness of these results to various extensions.

Item Type: Article
Official URL: http://www.elsevier.com/wps/find/journaldescriptio...
Additional Information: © 2009 Elsevier B.V.
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Sets: Departments > Finance
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 08 Feb 2011 11:14
URL: http://eprints.lse.ac.uk/32260/

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