Biased managers, organizational design, and incentive provision
Costa, C. M., Ferreira, D.
& Moreira, H.
(2005).
Biased managers, organizational design, and incentive provision.
Economics Letters,
86(3), 379-385.
https://doi.org/10.1016/j.econlet.2004.10.001
& Moreira, H.
(2005).
Biased managers, organizational design, and incentive provision.
Economics Letters,
86(3), 379-385.
https://doi.org/10.1016/j.econlet.2004.10.001
We model the tradeoff between the balance and the strength of incentives implicit in the choice between hierarchical and matrix organizational structures. We show that managerial biases determine which structure is optimal: hierarchical forms are preferred when biases are low, while matrix structures are preferred when biases are high.