Delegation and Team Selection in Organizations: An Experimental Study

58 Pages Posted: 19 Mar 2018

See all articles by John Hamman

John Hamman

Florida State University - Department of Economics

Miguel Martinez-Carrasco

Universidad de los Andes, Colombia - School of Management

Date Written: March 14, 2018

Abstract

We model a managerial decision environment in which a manager both determines the skill heterogeneity of her workers and determines whether to retain or delegate the ability to allocate tasks. The manager prefers delegating when uncertainty is sufficiently high relative to the incentive conflict with her workers, which is endogenously determined by her chosen team composition. Experimental data supports the direction of the main predictions, though it shows how and why participants deviate from expected behavior. In particular, it shows that managers selecting a team composition closer to the optimal predictions delegate better and have higher payoffs. Deviations from the optimal team composition are consistent with loss aversion and heuristic learning rules. Generally, the results highlight the difficulties in navigating complex managerial environments and illustrate potentially costly ways in which managers seek to simplify their decision.

Keywords: managerial decisions, delegation, team selection, organizations, task allocation

JEL Classification: C92, D23, D83, L22, M50

Suggested Citation

Hamman, John and Martinez-Carrasco, Miguel, Delegation and Team Selection in Organizations: An Experimental Study (March 14, 2018). Available at SSRN: https://ssrn.com/abstract=3140704 or http://dx.doi.org/10.2139/ssrn.3140704

John Hamman (Contact Author)

Florida State University - Department of Economics ( email )

Tallahassee, FL 30306-2180
United States

Miguel Martinez-Carrasco

Universidad de los Andes, Colombia - School of Management ( email )

Carrera Primera # 18A-12
Bogotá
Colombia

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