Biased managers, organizational design, and incentive provision

Humberto Moreira (), Cristiano Costa and Daniel Bernardo Soares Ferreira

No 525, FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) from EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil)

Abstract: We model the tradeoff between the balance and the strength of incentives implicit in the choice between hierarchical and matrix organizational structures. We show that managerial biases determine which structure is optimal: hierarchical forms are preferred when biases are low, while matrix structures are preferred when biases are high.

Date: 2004-02-01
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Journal Article: Biased managers, organizational design, and incentive provision (2005)
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