Date Added: Apr 2010
Unlike the textbook model of a top manager being an omniscient planner, coordinator and monitor, the real life managers suffer from discontinuity, lack of systematic information collection and limited time for analysis and reflection. Why do not business leaders set up their organizations in the way that would allow them to make informed choices based on thorough analysis? The authors argue that in some situations top managers may benefit from being less informed. In their model, additional information raises ex post flexibility of the decision-makers which may undermine the ex ante incentives of their subordinates to make specific investments.