Biased-Manager Hiring in a Market with Network Externalities and Product Compatibility

Shih-Hao Huang, Chien-Shu Tsai, Jen-Yao Lee and Su-Ching Tsai ()
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Shih-Hao Huang: School of Management, Jiangsu University, Zhenjiang 212013, China
Chien-Shu Tsai: Department of Fisheries Technology and Management, National Kaohsiung University of Science and Technology, Kaohsiung 811213, Taiwan
Jen-Yao Lee: Department of International Business, National Kaohsiung University of Science and Technology, Kaohsiung 807618, Taiwan
Su-Ching Tsai: Department of International Business, National Kaohsiung University of Science and Technology, Kaohsiung 807618, Taiwan

Games, 2025, vol. 16, issue 2, 1-8

Abstract: This paper studies biased-manager hiring in a market with network externalities and product compatibility. We show that the aggressivity of a biased manager has a non-linear relationship with product compatibility; however, since both owners want to hire aggressive managers, product compatibility is irrelevant to the type of manager the owner hires. In Cournot competition, product compatibility is crucial in alleviating the “prisoner’s dilemma” due to the net network effect of network externalities with product compatibility. In Bertrand competition, the “prisoner’s dilemma” is resolved when the augmented net network effect of product compatibility is large.

Keywords: network externalities; product compatibility; biased manager; Bertrand; Cournot (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2025
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