Biased Managers, Organizational Design, and Incentive Provision
Posted: 9 Jan 2005
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.
Keywords: Organizational Design, Incentive Provision, Common Agency
JEL Classification: L2, D82, M11
Suggested Citation: Suggested Citation