IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/86205.html
   My bibliography  Save this paper

Ability, Openness, and Managerial Decision Making

Author

Listed:
  • Wen, Lei
  • Zhou, Haiwen

Abstract

Impact of the ability and the degree of openness of a manager on decision making is studied. Whether a more able manager increases or decreases the effort of a subordinate depends on the relative quality of information. Greater openness is a two-edged sword: it increases the likelihood that more information will be employed, but it reduces the manager’s incentive to expend effort on obtaining better information. A more open manager is more desirable when the position is relatively more important or the prior information is not very accurate.

Suggested Citation

  • Wen, Lei & Zhou, Haiwen, 2018. "Ability, Openness, and Managerial Decision Making," MPRA Paper 86205, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:86205
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/86205/1/MPRA_paper_86205.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Julio J. Rotemberg & Garth Saloner, 1993. "Leadership Style and Incentives," Management Science, INFORMS, vol. 39(11), pages 1299-1318, November.
    2. Eric Van den Steen, 2005. "Organizational Beliefs and Managerial Vision," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(1), pages 256-283, April.
    3. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-328, March.
    4. Julio Rotemberg & Garth Saloner, 2000. "Visionaries, Managers, and Strategic Direction," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 693-716, Winter.
    5. Manelli, Alejandro M & Vincent, Daniel R, 1995. "Optimal Procurement Mechanisms," Econometrica, Econometric Society, vol. 63(3), pages 591-620, May.
    6. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Haiwen Zhou, 2023. "Unification and Division: A Theory of Institutional Choices in Imperial China," Annals of Economics and Finance, Society for AEF, vol. 24(1), pages 13-37, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Ferreira & Thomas Kittsteiner, 2016. "When Does Competition Foster Commitment?," Management Science, INFORMS, vol. 62(11), pages 3199-3212, November.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    3. Robert Dur & Ola Kvaløy & Anja Schöttner, 2022. "Leadership Styles and Labor Market Conditions," Management Science, INFORMS, vol. 68(4), pages 3150-3168, April.
    4. Christian Zehnder & Holger Herz & Jean-Philippe Bonardi, 2016. "A Productive Clash of Cultures: Injecting Economics into Leadership Research," CESifo Working Paper Series 6175, CESifo.
    5. Sergei Guriev & Anton Suvorov, 2010. "Why Less Informed Managers May Be Better Leaders," Working Papers w0142, Center for Economic and Financial Research (CEFIR).
    6. Kvaløy, Ola & Schöttner, Anja, 2015. "Incentives to motivate," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 26-42.
    7. Andrew Zhou, 2022. "The role of integrity and ability in leadership," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1290-1297, July.
    8. Linus Wilson, 2014. "Managerial ownership with rent-seeking employees," Annals of Finance, Springer, vol. 10(3), pages 375-394, August.
    9. Fulghieri, Paolo & Dicks, David, 2021. "Uncertainty, Contracting, and Beliefs in Organizations," CEPR Discussion Papers 15378, C.E.P.R. Discussion Papers.
    10. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    11. Marianne Bertrand & Antoinette Schoar, 2003. "Managing with Style: The Effect of Managers on Firm Policies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1169-1208.
    12. Oliver Masakure, 2012. "An empirical test of Lazear's leadership theory using evidence from Ghana," Applied Economics Letters, Taylor & Francis Journals, vol. 19(1), pages 79-82, January.
    13. Fleckinger, Pierre, 2012. "Correlation and relative performance evaluation," Journal of Economic Theory, Elsevier, vol. 147(1), pages 93-117.
    14. Lourdes Rojas Rubio, 2022. "Leader influence on Politics," THEMA Working Papers 2022-16, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    15. Eric Van den Steen, 2018. "Strategy and the Strategist: How It Matters Who Develops the Strategy," Management Science, INFORMS, vol. 64(10), pages 4533-4551, October.
    16. Kosfeld, Michael, 2019. "The Role of Leaders in Inducing and Maintaining Cooperation: The CC Strategy," IZA Discussion Papers 12540, Institute of Labor Economics (IZA).
    17. Stephen Michael Impink & Andrea Prat & Raffaella Sadun, 2021. "Communication within firms: evidence from CEO turnovers," CEP Discussion Papers dp1796, Centre for Economic Performance, LSE.
    18. Eric Van den Steen, 2010. "On the origin of shared beliefs (and corporate culture)," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 617-648, December.
    19. Oliver Hart & Bengt Holmstrom, 2008. "A Theory of Firm Scope," NBER Working Papers 14613, National Bureau of Economic Research, Inc.
    20. Roland Bénabou, 2013. "Groupthink: Collective Delusions in Organizations and Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 429-462.
    21. Nian Yang & Jun Yang & Yu Chen, 2018. "Contracting in a Continuous-Time Model with Three-Sided Moral Hazard and Cost Synergies," Graz Economics Papers 2018-06, University of Graz, Department of Economics.

    More about this item

    Keywords

    Managerial decision making; Bayesian decision making; ability; openness;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:86205. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.