Investitionsbudgetierung und implizite Verträge: Wie resistent ist der Groves-Mechanismus bei dynamischer Interaktion?

Groves Mechanism vs. Profit Sharing for Corporate Budgeting – An Experimental Analysis with Preplay Communication

“…In this case, cooperation between two rational players emerges because, in early rounds of the repeated game, rational players try to establish a reputation as a tit-for-tat player by playing cooperatively, in order to realize the additional payoffs from cooperation. In an extension of Kreps et al (1982), Kunz and Pfeiffer (1999) show that this rational cooperation also applies to the Groves mechanism.…”

“…Both the frequency of misrepresentation under the Groves mechanism that might emerge if there is a chance that players follow a so-called tit-for-tat strategy (H1b), as well as its effects on headquarters' earnings net of compensation costs, are not unambiguously predictable. They strongly depend on participants' assumptions about the probability that such players exist (Kunz and Pfeiffer (1999)). In this case, the comparison between the two incentive schemes is not clear.…”

Resource allocation within a budgeting game: truthful reporting as the dominant strategy under collusion

“…Firms are often faced with constrained fund-raising opportunities due to imperfections within capital markets (Martin and Morgan 1988;Smith and Kim 1994;Weingartner 1977). For that reason, a firm's headquarters has to make budgeting decisions while the various divisions have to compete for the headquarters' scarce financial resources (Kunz and Pfeiffer 1999). The headquarters may base budgeting decisions on available but incomplete information.…”

“…In the basic version of the Groves scheme, which was developed by Groves (1973) and Groves and Loeb (1979), the divisional managers have complete information about their own division's deterministic profit, which depends on the division's budget but not on the managers' work effort. Some extensions of the basic Groves scheme discuss uncertain or stochastic divisional profits (Bamberg and Locarek 1992;Banker and Datar 1992;Harris et al 1982;Hofmann and Pfeiffer 2003;Pfaff and Leutz 1995), model the impact of the divisional manager's efforts (Banker and Datar 1992;Budde et al 1998;Cohen and Loeb 1984;Harris et al 1982;Hofmann and Pfeiffer 2003;Pfaff and Leutz 1995) and apply the Groves scheme to a multi-period context (Kunz and Pfeiffer 1999).…”

“…Budde et al 1998 present a one-period model where the Groves scheme is not vulnerable to exploitation through collusion as long as communication among divisional managers is limited to "cheap talk". However, if divisional managers are able to strike collusive agreements or if they operate in a dynamic, multi-period setting, the Groves scheme turns out not to be "collusion-proof" (Kunz and Pfeiffer 1999).…”