Mediating Internal Competition for Resources* |
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Authors: | Suraj Prasad Yasunari Tamada |
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Institution: | 1. School of Economics, University of Sydney, Sydney, Australia;2. Faculty of Economics, Keio University, Minato-ku, Tokyo, Japan |
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Abstract: | We consider a model of internal competition, where projects developed by agents with different preferences compete for resources in an organization. Allowing a manager—who has moderate preferences—to control the allocation of resources has benefits when preferences are not too diverse. In particular, the manager acts as a mediator, forcing agents to compromise when competing projects succeed, thus providing better insurance to agents and increasing their effort. Our framework provides a theoretical foundation for two influential views of a manager—as the “visible hand” that allocates resources, and as a “power broker” who resolves conflict in an organization. |
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