Who’s the Boss? The Economic and Behavioral Implications of Various Characterizations of the Superior in Participative Budgeting Experiments
48 Pages Posted: 19 Aug 2012 Last revised: 17 Apr 2015
Date Written: August 19, 2012
In most organizations, budgets are important mechanisms for planning and control and for motivating subordinate performance. Accordingly, budgeting is one of the most extensively studied topics in managerial accounting. We analyze previous research by first classifying studies according to their characterization of the superior which we label Homo Economicus, Homo Optimas and Homo Vivas. Homo Economicus is a rational economic agent who accepts all budgets because it is in her best interest to do so. Homo Optimas employs the optimal hurdle-rate contract. Finally, Homo Vivas is an experimental participant whose role depends on the decisions she is allowed to make as determined by the experimental design. We explore the economic and behavioral implications of each type of superior for the interpretation of extant research and we provide directions for future research in participative budgeting.
Keywords: participative budgeting, budgetary slack, superior type
JEL Classification: C91
Suggested Citation: Suggested Citation