Titel: On the robustness of coordination mechanisms for investment decisions involving 'incompetent' agents

In this paper we transfer the concept of the competitive hurdle rate (CHR) mechanism introduced by Baldenius T., Dutta S., and Reichelstein S. (Cost Allocation for Capital Budgeting Decisions. The Accounting Review 82(4): 837-867, 2007) into an agent-based model, and test its robustness with respect to an occurrence of errors in forecasting. We find that our CHR born mechanism is most robust for highly diversified investment alternatives and a limited amount of those projects in need of scarce financial support. For misforecasting both the cash flow time series and the managers' individual efficiencies of operating investment projects, we find that this result reverses with an increasing extent of being wrong, so that a lower level of project heterogeneity appears to be more advantageous than a highly diversified investment landscape, i.e., if managers are really, really wrong about future economic development, the company fares better (or less worse, to be precise) if the investment alternatives are less dissimilar. This investigation allows to quantify the extent of error, when this comes about. Moreover, we provide policy advice for how an organization could design the framework of the CHR born mechanism so that forecasting errors, which inevitably occur, bring only minimal damage to the company.

Publikationstyp: Beitrag in Sammelwerk (Autorenschaft)
Art der Veröffentlichung Printversion
Erschienen in: Artificial Economics and Self Organization
Artificial Economics and Self Organization (2014)
zur Publikation
 ( Springer Science + Business Media B.V.; S. Leitner, F. Wall )
Erscheinungsdatum: 2014
Titel der Serie: Lecture Notes in Economics and Mathematical Systems
Bandnummer: 699
Erstveröffentlichung: Ja
Seite: S. 191 - 203


  • 978-3-319-00911-7
  • 978-3-319-00912-4
ISSN: 0075-8442
AC-Nummer: -
Open Access
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Organisation Adresse
Fakultät für Wirtschaftswissenschaften
Institut für Unternehmensführung
Abteilung für Controlling und Strategische Unternehmensführung
Universitätsstrasse 67
9020 Klagenfurt
zur Organisation
Universitätsstrasse 67
AT - 9020  Klagenfurt


  • 101015 - Operations Research
  • 502006 - Controlling
  • 502044 - Unternehmensführung
  • Selbstorganisierende Systeme
  • Unternehmertum
Peer Reviewed
  • Ja
  • Science to Science (Qualitätsindikator: I)
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