Project design with limited commitment and teams. (September 2014)

• Record Type: Journal Article
• Authors: Georgiadis, George; Lippman, Steven A.; Tang, Christopher S.
• Is Part Of: Rand journal of economics. Volume 45:Number 3(2014:Autumn)
• Page Start: 598
• Page End: 623
• Publication Date: 2014-09
• Subjects: Industrial organization (Economic theory) -- Periodicals; Microeconomics -- Periodicals; Services publics -- Périodiques; Économie industrielle -- Périodiques; Microéconomie -- Périodiques; 338.6
• DOI: 10.1111/1756-2171.12064
• Languages: English
• ISSNs: 0741-6261

Abstract

<abstract abstract-type="main"> <title> <x xml:space="preserve">Abstract</x> </title> <p>We study the interaction between a group of agents who exert effort to complete a project and a manager who chooses its objectives. The manager has limited commitment power so that she can commit to the objectives only when the project is sufficiently close to completion. We show that the manager has incentives to extend the project as it progresses. This result has two implications. First, the manager will choose a larger project if she has less commitment power. Second, the manager should delegate the decision rights over the project size to the agents unless she has sufficient commitment power.</p> </abstract>