 The effects of optimism bias in teamsJian Wang, Xintian Zhuang, Jun Yang and Jiliang Sheng Applied Economics, 2014, vol. 46, issue 32, 3980-3994 Abstract: 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 contracts offered to agents in equilibrium. The results indicate that all agents become more reluctant to exert effort and the team welfare decreases when some of its agents are optimistic, suggesting that optimism aggravates the free-rider problem in teams. Appointing a team leader makes all agents work harder, and the team benefits more by having the optimistic agent as its leader. These findings are in sharp contrast to the effects of overconfidence as identified in the literature. It is advisable to pay the optimistic agents less than the rational agents. Encouragingly, optimistic agents can learn about their own bias in the long run, leaving their team without too much detriment of optimism. Date: 2014 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:46:y:2014:i:32:p:3980-3994 Ordering information: This journal article can be ordered from DOI: 10.1080/00036846.2014.948678 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
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