309
Views
10
CrossRef citations to date
0
Altmetric
Original Articles

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

, &
Pages 37-63 | Published online: 16 Apr 2008

References

  • Abbink, K., and Brandts, J., 2002. University of Nottingham and University of Barcelona; 2002, 24, Working Paper.
  • Arnold, M. C., and Ponick, E., 2006. Kommunikation im Groves-Mechanismus – Ergebnisse eines Laborexperiments, Zeitschrift für betriebswirtschaftliche Forschung 58 (2006), pp. 89–120.
  • Attiyeh, G., Franciosi, R., and Isaac, R. M., 2000. Experiments with the pivot process for providing public goods, Public Choice 102 (2000), pp. 95–114.
  • Baldenius, T., Dutta, S., and Reichelstein, S., 2007. Cost allocation for capital budgeting, The Accounting Review 82 (2007), pp. 837–867.
  • Banker, R. D., and Datar, S. M., 1992. Optimal transfer pricing under postcontract information, Contemporary Accounting Research 8 (1992), pp. 329–352.
  • Bochet, O., Page, T., and Putterman, L., 2006. Communication and punishment in voluntary contribution experiments, Journal of Economic Behavior and Organization 60 (2006), pp. 11–26.
  • Brosig, J., Weimann, J., and Ockenfels, A., 2003. The effect of communication media on cooperation, German Economic Review 4 (2003), pp. 217–241.
  • Budde, J., Göx, R. F., and Luhmer, A., 1998. Absprachen beim Groves-Mechanismus – eine spieltheoretische Untersuchung, Zeitschrift für betriebswirtschaftliche Forschung 50 (1998), pp. 3–20.
  • Bushman, R. M., Indjejikian, R. J., and Smith, A., 1995. Aggregate performance measures in business unit manager compensation: the role of intrafirm interpendencies, Journal of Accounting Research 33 (1995), pp. 101–128.
  • Camerer, C., 2003. Behavioral Game Theory. Princeton, NJ: Princeton University Press; 2003.
  • Chow, C. W., Hirst, M., and Shields, M. D., 1994. Motivating truthful subordinate reporting: an experimental investigation in a two-subordinate context, Contemporary Accounting Research 10 (1994), pp. 699–720.
  • Chow, C. W., Hirst, M., and Shields, M. D., 1995. The effects of pay schemes and probabilistic management audits on subordinate misrepresentation of private information: an experimental investigation in a resource allocation context, Behavioral Research in Accounting 7 (1995), pp. 1–16.
  • Chow, C. W., Hwang, R. N.-C., and Liao, W., 2000. Motivating truthful upward communication of private information: an experimental study of mechanisms from theory and practice, Abacus 36 (2000), pp. 160–179.
  • Clarke, E. H., 1971. Multipart pricing of public goods, Public Choice 8 (1971), pp. 17–33.
  • Cohen, S. I., and Loeb, M., 1984. The Groves scheme, profit sharing and moral hazard, Management Science 30 (1984), pp. 20–24.
  • Cooper, R., DeJong, D. V., Forsythe, R., and Ross, T. W., 1989. Communication in the battle of the sexes game: some experimental results, Rand Journal of Economics 20 (1989), pp. 568–587.
  • Cooper, R., DeJong, D. V., Forsythe, R., and Ross, T. W., 1990. Selection criteria in cooperation games: some experimental results, The American Economic Review 80 (1990), pp. 218–233.
  • Cooper, R., DeJong, D. V., Forsythe, R., and Ross, T. W., 1994. "Alternative institutions for resolving coordination problems: experimental evidence on forward induction and preplay communication, in: J. Friedman (Ed.)". In: Problems of Coordination in Economic Activity. Boston, MA: Kluwer; 1994. pp. 129–146.
  • Covaleski, M. A., Evans, J. H., Luft, J. L., and Shields, M. D., 2003. Budgeting research: three theoretical perspectives and criteria for selective integration, Journal of Management Accounting Research 15 (2003), pp. 3–49.
  • Crémer, J., 1996. Manipulation by coalitions under asymmetric information: the case of the Groves mechanism, Games and Economic Behavior 13 (1996), pp. 39–73.
  • Dash, R. K., Jennings, N. R., and Parkes, D. C., 2003. Computational mechanism design: a call to arms, IEEE Intelligent Systems 18 (2003), pp. 40–47.
  • Farrell, J., 1987. Cheap talk, coordination, and entry, Rand Journal of Economics 18 (1987), pp. 34–39.
  • Farrell, J., and Rabin, M., 1996. Cheap talk, Journal of Economic Perspectives 10 (1996), pp. 103–118.
  • Fehr, E., and Gächter, S., 2000. Cooperation and punishment in public goods experiments, The American Economic Review 90 (2000), pp. 980–994.
  • Fisher, J. G., Maines, L. A., Peffer, S. A., and Sprinkle, G. B., 2002. Using budgets for performance evaluation: effects of resource allocation and horizontal information asymmetry on budget proposals, budget slack, and performance, The Accounting Review 77 (2002), pp. 847–865.
  • Frohlich, N., and Oppenheimer, J., 1998. Some consequences of e-mail vs. face-to-face communication in experiment, Journal of Economic Behavior and Organization 35 (1998), pp. 389–403.
  • Garg, D., Narahari, Y., Foster, E., Kulkarni, D., and Tew, J. D., 2005. A Groves mechanism approach to decentralized design of supply chains, in:, Proceedings of the Seventh IEEE International Conference on E-Commerce Technology (2005), pp. 330–337.
  • Green, J., and Laffont, J.-J., 1979. On coalition incentive compatibility, The Review of Economic Studies 46 (1979), pp. 243–254.
  • Groves, T., 1973. Incentives in teams, Econometrica 41 (1973), pp. 617–633.
  • Groves, T., 1976. "Incentive compatible control of decentralized organizations". In: Ho, Y. C., and Mitter, S. K., eds. Directions in Large-Scale Systems – Many-Person Optimization and Decentralized Control. New York: Academic Press; 1976. pp. 149–185.
  • Groves, T., and Loeb, M., 1979. Incentives in a divisionalized firm, Management Science 25 (1979), pp. 221–230.
  • Güth, W., Schmidtberger, R., and Schwarze, B., 1983. A theoretical and experimental analysis of bidding behavior in Vickrey-auction games, Journal of Institutional and Theoretical Economics 139 (1983), pp. 269–288.
  • Hansen, S. C., Otley, D. T., and Van der Stede, W. A., 2003. Practice developments in budgeting: an overview and research perspective, Journal of Management Accounting Research 15 (2003), pp. 95–116.
  • Harris, M., Kriebel, C. H., and Raviv, A., 1982. Asymmetric information, incentives and intrafirm resource allocation, Management Science 28 (1982), pp. 604–620.
  • Harsanyi, J. C., and Selten, R., 1988. A General Theory of Equilibrium Selection in Games. Cambridge, MA: MIT Press; 1988.
  • Hofmann, C., and Pfeiffer, T., 2003. Investitionsbudgetierung und Anreizprobleme: Ist der Groves- Mechanismus nur third-best? Zur Effizienz des Groves-Budgetierungsmechanismus, Zeitschrift für Betriebswirtschaft 73 (2003), pp. 559–582.
  • Isaac, R. M., and James, D., 2000. Robustness of the incentive compatible combinatorial auction, Experimental Economics 3 (2000), pp. 31–53.
  • Jensen, M. C., 2003. Paying people to lie: the truth about the budgeting process, European Financial Management 9 (2003), pp. 379–406.
  • Kamarei, H., and Morrison, C. C., 1990. Some experimental evidence regarding collusion, Atlantic Economic Journal 18 (1990), pp. 27–36.
  • Kanodia, C., 1993. Participative budgets as coordination and motivational devices, Journal of Accounting Research 31 (1993), pp. 172–189.
  • Karabuk, S., and Wu, S. D., 2005. Incentive schemes for semiconductor capacity allocation: a game theoretic analysis, Production and Operations Management 14 (2005), pp. 175–188.
  • Kawagoe, T., and Mori, T., 2001. Can the pivotal mechanism induce truth-telling? An experimental study, Public Choice 108 (2001), pp. 331–354.
  • Kreps, D. M., Milgrom, P., Roberts, J., and Wilson, R., 1982. Rational cooperation in the finitely repeated prisoners' dilemma, Journal of Economic Theory 27 (1982), pp. 245–252.
  • Kunz, A. H., and Pfeiffer, T., 1999. Investitionsbudgetierung und implizite Verträge: Wie resistent ist der Groves-Mechanismus bei dynamischer Interaktion?, Zeitschrift für betriebswirtschaftliche Forschung 51 (1999), pp. 203–223.
  • Kutanoglu, E., and Wu, S. D., 2006. Incentive compatible, collaborative production scheduling with simple communication among distributed agents, International Journal of Production Research 44 (2006), pp. 421–446.
  • Loeb, M., and Magat, W. A., 1978. Soviet success indicators and the evaluation of divisional management, Journal of Accounting Research 16 (1978), pp. 103–121.
  • Mookherjee, D., 2006. Decentralization, hierarchies, and incentives: a mechanism design perspective, Journal of Economic Literature 44 (2006), pp. 367–390.
  • Murphy, K. J., and Oyer, P., 2003. "Discretion in executive incentive contracts". University of Southern California and Stanford University; 2003, Working Paper.
  • Nisan, N., and Ronen, A., 2001. Algorithmic mechanism design, Games and Economic Behavior 35 (2001), pp. 166–196.
  • Ochs, J., 1995. "Coordination problems". In: Kagel, J. H., and Roth, A. E., eds. The Handbook of Experimental Economics. Princeton, NJ: Princeton University Press; 1995. pp. 195–252.
  • Osband, K., and Reichelstein, S. J., 1985. Information-eliciting compensation schemes, Journal of Public Economics 27 (1985), pp. 107–115.
  • Reichelstein, S. J., and Osband, K., 1984. Incentives in government contracts, Journal of Public Economics 24 (1984), pp. 257–270.
  • Sally, D., 1995. Conversation and cooperation in social dilemmas, Rationality and Society 7 (1995), pp. 58–92.
  • Schelling, T., 1966. The Strategy of Conflict, . Cambridge, MA: Harvard University Press; 1966.
  • Tirole, J., 1986. Hierarchies and bureaucracies: on the role of collusion in organizations, Journal of Law, Economics, and Organization 2 (1986), pp. 181–214.
  • Van Huyck, J. B., Battalio, R. C., and Beil, R. O., 1990. Tacit coordination games, strategic uncertainty, and coordination failure, The American Economic Review 80 (1990), pp. 234–248.
  • Vickrey, W., 1964. Counterspeculation, auctions, and competitive sealed tenders, The Journal of Finance 16 (1964), pp. 8–37.
  • Waller, W. S., 1994. Discussion of ‘Motivating truthful subordinate reporting: an experimental investigation in a two-subordinate context’, Contemporary Accounting Research 10 (1994), pp. 721–734.
  • Waller, W. S., and Bishop, R. A., 1990. An experimental study of incentive pay schemes, communication, and intrafirm resource allocation, The Accounting Review 65 (1990), pp. 812–836.
  • Weitzman, M. L., 1976. The new Soviet incentive model, Bell Journal of Economics 7 (1976), pp. 251–257.
  • Wulf, J., 2002. Internal capital markets and firm-level compensation incentives for division managers, Journal of Labor Economics 20 (2002), pp. S219–S262.
  • Yokoo, M., Sakurai, Y., and Matsubara, S., 2004. The effect of false-name bids in combinatorial auctions: new fraud in Internet auctions, Games and Economic Behavior 46 (2004), pp. 174–188.

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.