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Study On Behavioral Firm Theory Based On Overconfidence

Posted on:2005-08-15Degree:DoctorType:Dissertation
Country:ChinaCandidate:Q A ChenFull Text:PDF
GTID:1116360152465619Subject:Technical Economics and Management
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The behavioral firm theory, which is one of the newest research fields of modern economics and represents an important research direction of firm theory, has been highly valued by academic circles and business management circles. But because of short development time, the behavioral firm theory is not too perfect and has not built a set of complete theoretical system as traditional firm theory so far. It could be seen from the present research document that the research about the behavioral firm theory in the West is in the beginning stage and less research on this problem has been done in our country. At the theoretical hand, the author hopes that the research works of this dissertation could supplement and enrich the system of the behavioral firm theory and set up a theoretical platform for the future research of the behavioral firm theory. At the practical hand, the author hopes that the research results of this dissertation could provide some theoretical guidances and beneficial insights for declining the manager's moral hazard, improving the principal-agent relationship between the owner and the manager, reforming the state-owned enterprises of our country to modern stock company and formulating the effective mechanism of selecting, stimulating and restricting the state-owned enterprise managers.Taking the traditional firm theory and the relevant psychological theories as research basis, the behavioral firm theory as object of study, the overconfident psychological preferences of the firm managers as research main line, this dissertation focuses on researching the following problems: the cooperation problem between partners in a partnership firm, the principal-agent problem in stock company, the CEO compensation problem in open stock company and the principal-agent contract between the financial institution and the money managers, and thoroughly probes into the effect mechanism of the firm managers' overconfident psychological preferences on their decision processes and decision results and the potential roles of the overconfidence in solving the firm manager's moral hazard. The research result shows that the appropriate overconfidence of the firm managers is an alternative solution scheme to solve the aforementioned problems.The main research works and conclusions of this dissertation are as the follows:(1) This dissertation combs and reviews the development process of the firm theory rather thoroughly, and clarifies the psychology basis and the economics basis ofthe behavioral firm theory and provides a useful theoretical platform for further studying the behavioral firm theory.(2) This dissertation sets up the partner cooperation behavior model based on overconfidence and uses this model to demonstrate that the partners' overconfidence is beneficial for improving the cooperation relationship between partners and declining the partners' moral hazard in partnership firm; and the external monitoring and the overconfidence of partners are substitutes rather than complements for the expected utility of the whole partnership firm; and the overconfident level of the overconfident partners would exist for a long time and appear a trend of fluctuating downward in the time.(3) This dissertation originates the principal-agent relationship model in stock company based on overconfidence and uses this model to demonstrate that the principal-agent contract that the agent obtains all residual return and the principal only obtains fixed return corresponding to his fund is optimal for the principal under the condition that the principal does not monitor the agent, moreover, the fixed return which the principal obtains is increased in the overconfident level of the agent and decreased in the agent's reservation utility level; and when the principal asks to own the residual right of recourse on the firm value and is willing to monitor the agent, the optimal level of effort exerted by the agent in equilibrium would always increase in the overconfident level of the agent and the optimal intensity of monitoring of the principal i...
Keywords/Search Tags:Overconfidence, Behavioral Firm Theory, Behavior of Partner Cooperation, Principal-Agent Relationship, CEO Compensation
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