Sunflower Management and Capital Budgeting

Arnoud Boot, Todd T. Milbourn and Anjan Thakor ()
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Todd T. Milbourn: Washington University

The Journal of Business, 2005, vol. 78, issue 2, 501-528

Abstract: In organizations, ideas are often delegated for evaluation as a means of efficiently aggregating multiple information signals. However, those who delegate often find it impossible to separate the evaluation of the ideas they delegate from the evaluation of abilities of those delegated the task of assessing these ideas. This commingling of the assessment of the idea with that of the individual agent generates a tendency for the agent to ignore his or her own information and instead attempt to confirm the superior's prior belief. We refer to this as sunflower management and examine its effects on capital budgeting practices.

Date: 2005
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Citations: View citations in EconPapers (6)

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Working Paper: Sunflower Management and Capital Budgeting (2002)
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