Hiring Biased Managers: Kant vs. Nash

Abstract This paper investigates how firm owners select biased managers under different competition modes with Kantian Optimization principle. We show that in both Cournot competition and Bertrand competition, the optimal strategy under Kantian optimization is to hire relatively conservative managers. This stands in contrast to the findings under Nash optimization, where owners optimally choose relatively aggressive managers. Additionally, we demonstrate that the cross effect of a rival firm’s managerial type on a firm’s expected market size does not influence the owner’s optimal choice of manager type.