Premium
Project design with limited commitment and teams
Author(s) -
Georgiadis George,
Lippman Steven A.,
Tang Christopher S.
Publication year - 2014
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12064
Subject(s) - delegate , commit , functional manager , project manager , business , incentive , power (physics) , escalation of commitment , project management , computer science , microeconomics , project management triangle , economics , project charter , management , physics , quantum mechanics , database , programming language
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.