- Killing the bearer of ill tidings
- Amsterdam / Rotterdam: Tinbergen Institute
- Tinbergen Institute Discussion Paper
- Volume | Edition (Serie)
- TI 1998-061/2
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam Business School Research Institute (ABS-RI)
This paper examines the distortionary phenomena which occur when agentswithin the firm react to the organizational reality that the evaluation ofthe ideas that they analyze is often inseparable from the evaluation oftheir own ability. The commingling of the assessment of thebusiness issue with that of the individual manager generates'consensus-provision' moral hazard. It causes managers to reportassessments of business situations that they believe will coincidewith the assessments of the people they report to. This desire to provideconsensus leads to various distortions and helps illuminate some puzzlingcorporate practices related to project hurdle rates, the choice of paybackas a project selection criterion, 'groupthink', herding behavior, businesscycles and reluctance to be the 'bearer of ill tidings'.
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