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Englmaier, Florian (2010): Managerial Optimism and Investment Choice. In: Managerial and Decision Economics, Vol. 31, No. 4: pp. 303-310
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This paper analyzes whether it might be desirable for a firm to hire an overoptimistic manager to commit to a certain R&D strategy. I consider a Cournot model with an ex-ante R&D stage where firms can invest in cost reduction before product market competition takes place. I show that firms want to hire overoptimistic managers and argue that a manager's type may serve as a substitute for strategic delegation via contracts. © 2010 John Wiley & Sons,Ltd.