We analyze a model in which agents exert effort to create innovations within an organization. When payments are infeasible, the decision on the implementation of a proposal is shown to be made by simple monotonic decision rules. Then we look for optimal rules in several contexts. A trade-off arises between the use of information and the incentives created by a rule. If the former dominates it will currently be optimal to install a hierarchy. Otherwise granting autonomy to the innovators may be better. The unanimity rule may be optimal if average proposals are bad for the organization and a strong filtering is necessary.
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Publisher Info
Paper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number
601.
Length: Date of creation: Jul 1999 Date of revision: Handle: RePEc:bon:bonsfa:601
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