Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94155
Authors: 
Nieken, Petra
Sadrieh, Abdolkarim
Zhou, Nannan
Year of Publication: 
2011
Series/Report no.: 
SFB/TR 15 Discussion Paper 368
Abstract: 
Overconfidence is a well-established behavioral phenomenon that involves an overestimation of own capabilities. We introduce a model, in which managers and agents exert effort in a joint production, after the manager decides on the allocation of the tasks. A rational manager tends to delegate the critical task to the agent more often than given by the efficient task allocation. In contrast, an overconfident manager is more likely to hoard responsibility, i.e. to delegate the critical task less often than a rational manager. In fact, a manager with a sufficiently high ability and a moderate degree of overconfidence increases the total welfare by hoarding responsibility and exerting more effort than a rational manager. Finally, we derive the conditions under which responsibility hoarding can persist in an organization, showing that the bias survives as long as the overconfident manager can rationalize the observed output by underestimating the ability of the agent.
Subjects: 
organizational behavior
management performance
bounded rationality
behavioral bias
JEL: 
C72
D03
D82
M12
M54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.