Managers as administrators: Reputation and incentives

Amil Dasgupta and Yianis Sarafidis

Journal of Economic Behavior & Organization, 2009, vol. 70, issue 1-2, 155-163

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.

Keywords: Incentive; conflicts; Career; concerns; Reputation; Conformism (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:70:y:2009:i:1-2:p:155-163

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