Project design with limited commitment and teams

George Georgiadis, Steven A. Lippman, Christopher S. Tang

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

We study the interaction between a group of agents who exert effort to complete a project and a manager who chooses its objectives. The manager has limited commitment power so that she can commit to the objectives only when the project is sufficiently close to completion. We show that the manager has incentives to extend the project as it progresses. This result has two implications. First, the manager will choose a larger project if she has less commitment power. Second, the manager should delegate the decision rights over the project size to the agents unless she has sufficient commitment power.

Original languageEnglish (US)
Pages (from-to)598-623
Number of pages26
JournalRAND Journal of Economics
Volume45
Issue number3
DOIs
StatePublished - 2014

ASJC Scopus subject areas

  • Economics and Econometrics

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