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Exploring decision-making: experimental observations on project selection and the impact of justification pressure

Author

Listed:
  • Christian Lukas

    (Friedrich-Schiller-Universität Jena)

  • Max-Frederik Neubert

    (Otto-von-Guericke-Universität Magdeburg)

  • Jens Robert Schöndube

    (Leibniz Universität Hannover)

Abstract

In this experimental investigation, we explore the impact of justification on project choices. Introducing a novel element, we implement asymmetric payoff schemes commonly employed in business, signifying distinct payoff distributions for the firm (principal) and the manager (agent). The agent has to choose one project from two options that differ in their risk-return profiles. The outcomes of our experiment substantiate our hypothesis, indicating that a mandate for justification decreases the probability of agents selecting the project with higher risk and return. The degree of this reduction appears to hinge on the nature of justification. Increased profit shares for the agent or a project recommendation from the principal can partially counterbalance the distortion in the project choice.

Suggested Citation

  • Christian Lukas & Max-Frederik Neubert & Jens Robert Schöndube, 2025. "Exploring decision-making: experimental observations on project selection and the impact of justification pressure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(3), pages 735-775, September.
    • Handle: RePEc:kap:jmgtgv:v:29:y:2025:i:3:d:10.1007_s10997-024-09717-9
    DOI: 10.1007/s10997-024-09717-9
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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