Heterogeneous agents and decison making within firms

Chung-yu Hung

Research output: ThesisDoctoral Thesis

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This dissertation explores the implications of agents’ heterogeneity in decision making within situations where information is not completely contractible. Specifically, the study applies empirical methods across three chapters to examine the role of employees’ traits and their mutual relationships in decision making within firms. The first chapter investigates the association between managerial ability and managers’ discretionary bonus decisions using a dataset from a Chinese hospital and shows that more able managers keep a smaller bonus slice to themselves and make a lower degree of bonus differentials among the subordinates than less able managers.
The second chapter analyzes data from a manufacturer in China that includes two work environments: (1) the LINE setting, with a production environment composed of stand-alone work stations and individual incentives, and (2) the GROUP setting, with joint team production and group incentives. Here, the research analyzes the effects of workforce homogeneity on employee learning and provision of effort, as well as whether the effects differ across the two settings. This chapter documents that workforce homogeneity decreases employee learning in the LINE setting, but improves learning in the GROUP setting. However, it does not find empirical evidence on employee effort provision.
The final chapter explores how the working relationship between decision makers and information providers simultaneously affects information use and reporting through data on loan approval decisions in a car dealership in Taiwan, where the working relationship is shaped by whether information providers work either in a franchise or in a company outlet. The findings suggest that the close working relationship reduces biases in information use and reporting and results in a low default rate.
Original languageEnglish
Awarding Institution
  • Tilburg University
  • van Lent, Laurence, Promotor
  • Abernethy, Margareth, Co-promotor
Award date22 May 2015
Place of PublicationTilburg
Print ISBNs9789056684358
Publication statusPublished - 2015


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