Commitment in R&D tournaments via strategic delegation to overoptimistic managers

Florian Englmaier

Managerial and Decision Economics, 2011, vol. 32, issue 1, 63-69

Abstract: This paper shows that it is profitable for a firm to hire an overoptimistic manager to commit to a certain investment strategy in an R&D tournament situation. In the unique symmetric equilibrium, all firms delegate to overoptimistic managers, where the optimal degree of overoptimism depends on the riskiness of the tournament. In these situations a manager's type may serve as a substitute for delegation via contracts. By delegating to overoptimistic managers, firms can escape the rat race nature of R&D tournaments. Copyright (C) 2010 John Wiley & Sons, Ltd.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1518

Related works:
Working Paper: Commitment in R&D tournaments via strategic delegation to overoptimistic managers (2011)
Working Paper: Commitment in R&D Tournaments via Strategic Delegation to Overoptimistic Managers (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:32:y:2011:i:1:p:63-69

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().