Managers as administrators: Reputation and incentives
AbstractIn many firms managers play the role of administrators, adding value by successfully implementing solutions to problems that the firm may face. We model the career concerns of administrators. When administrators receive the same information but differ in their administrative abilities, we show that they may not choose tasks that are appropriate for the problems they face. In particular, in any pure strategy equilibrium of our model, administrators do not condition their behavior on any of their private information, despite the fact that they are risk neutral and know their administrative ability. We thus identify a novel source of incentive conflicts in firms. We also examine the robustness of these results to various extensions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 70 (2009)
Issue (Month): 1-2 (May)
Contact details of provider:
Web page: http://www.elsevier.com/locate/jebo
Incentive conflicts Career concerns Reputation Conformism;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Scharfstein, David. & Stein, Jeremy C., 1988.
"Herd behavior and investment,"
WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999.
"The economics of career concerns: part 2 :application to missions and accountability of government agencies,"
ULB Institutional Repository
2013/9641, ULB -- Universite Libre de Bruxelles.
- Dewatripont, Mathias & Jewitt, Ian & Tirole, Jean, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 199-217, January.
- Jeffrey Ely & Drew Fudenberg & David K Levine, 2005.
"When is Reputation Bad,"
Levine's Working Paper Archive
618897000000000016, David K. Levine.
- Jeffrey Ely & Drew Fudenberg & David K. Levine, 2002. "When is Reputation Bad?," Harvard Institute of Economic Research Working Papers 1962, Harvard - Institute of Economic Research.
- Jeffery Ely & Drew Fudenberg & David Levine, 2002. "When is Reputation Bad?," Discussion Papers 1358, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jeffrey Ely & Drew Fudenberg & David K. Levine, 2004. "When is Reputation Bad?," Harvard Institute of Economic Research Working Papers 2035, Harvard - Institute of Economic Research.
- Levine, David & Ely, Jeffrey & Fudenberg, Drew, 2008. "When is Reputation Bad?," Scholarly Articles 3196337, Harvard University Department of Economics.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992.
"A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades,"
Journal of Political Economy,
University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
- Prendergast, Canice & Stole, Lars, 1996. "Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1105-34, December.
- James Dow & Clara C. Raposo, 2005. "CEO Compensation, Change, and Corporate Strategy," Journal of Finance, American Finance Association, vol. 60(6), pages 2701-2727, December.
- Benabou, R. & Laroque, G., 1989.
"Using Privileged Information To Manipulate Markets: Insiders, Gurus, And Credibility,"
513, Massachusetts Institute of Technology (MIT), Department of Economics.
- Benabou, Roland & Laroque, Guy, 1992. "Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 921-58, August.
- Benabou, R. & Laroque, G., 1988. "Using Privileged Information To Manipulate Markets: Insiders, Gurus And Credibility," Papers 19, Princeton, Woodrow Wilson School - Discussion Paper.
- Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
- Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
- Stephen Morris, 1999.
Cowles Foundation Discussion Papers
1242, Cowles Foundation for Research in Economics, Yale University.
- V. Crawford & J. Sobel, 2010.
"Strategic Information Transmission,"
Levine's Working Paper Archive
544, David K. Levine.
- Holmstrom, Bengt & Ricart i Costa, Joan, 1986.
"Managerial Incentives and Capital Management,"
The Quarterly Journal of Economics,
MIT Press, vol. 101(4), pages 835-60, November.
- Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 557-73, October.
- Marco Ottaviani & Peter Norman Sørensen, 2006. "Reputational cheap talk," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 155-175, 03.
- Ottaviani, Marco & Sorensen, Peter Norman, 2006.
Journal of Economic Theory,
Elsevier, vol. 126(1), pages 120-142, January.
- Dasgupta, Amil & Prat, Andrea, 2008. "Information aggregation in financial markets with career concerns," Journal of Economic Theory, Elsevier, vol. 143(1), pages 83-113, November.
- Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
- Milbourn, Todd T & Shockley, Richard L & Thakor, Anjan V, 2001. "Managerial Career Concerns and Investments in Information," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 334-51, Summer.
- Jeffrey C. Ely & Juuso Välimäki, 2003.
The Quarterly Journal of Economics,
MIT Press, vol. 118(3), pages 785-814, August.
- Suurmond, Guido & Swank, Otto H. & Visser, Bauke, 2004. "On the bad reputation of reputational concerns," Journal of Public Economics, Elsevier, vol. 88(12), pages 2817-2838, December.
- Zwiebel, Jeffrey, 1995. "Corporate Conservatism and Relative Compensation," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 1-25, February.
- Singell, Larry D. & Tang, Hui-Hsuan, 2013. "Pomp and circumstance: University presidents and the role of human capital in determining who leads U.S. research institutions," Economics of Education Review, Elsevier, vol. 32(C), pages 219-233.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.