Project Assignments When Budget Padding Taints Resource Allocation

This paper shows that rotation programs can be an effective response to concerns of employee budget padding. Rotation programs naturally create a “portfolio” of assignments for each manager, and the resulting diversification can reduce the downside of resource rationing. In particular, the production versus rents trade-off linked with adverse selection problems can be more efficiently carried out when the firm faces two managers with average information advantages, rather than one with a large advantage and one with a small advantage. Roughly stated, rotation of project assignments is a way of smoothing information across managers. On the other hand, if a firm places a premium on treating different types of projects in distinct ways, specialized assignments can be preferred due to the ability to confine project types to individual managers.

• 저널Management Science · 52(9) · 1345–1358
• 토픽Auction Theory and Applications · Management Science and Operations Research
• DOI10.1287/mnsc.1060.0532
• 저자Anil Arya, Brian Mittendorf