Delegation and Team Selection
Speaker(s)John Hamman (Florida State University, United States)
LocationUvA - E-building, Roetersstraat 11, Room E0.04
Date and time
November 15, 2018
16:00 - 17:15
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 aver- sion 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 decisions.