The organization of project evaluation under competition

This article examines the optimal organizational form of project evaluation under competition. The evaluations are carried out by two fallible screening units that sequentially assess projects. Screening can be organized as a hierarchy or a polyarchy. We show that as competitive pressure rises, the polyarchy becomes less attractive. Therefore, different organizational forms might be found in different industries depending on the degree of competition. In addition, we examine endogenous screening rules under competition: For symmetric situations, we show that polyarchies will employ higher decision thresholds compared to hierarchies. Nonetheless, as in the case of exogenous screening rules, the hierarchy becomes more attractive the higher the degree of competition.

Frauke LammersEmail: