Decisions of the Board

This paper presents a model for investigating group decisions of managers who are imperfectlyinformed and averse to taking risks. Of primary interest is financial success for risk neutral shareholderswho have no other aim than maximizing expected profit and can therefore be treatedhomogeneously with respect to their objectives. The managers have a share in the financialsuccess of the decision as incentive and furthermore pursue personal goals. Following the managers'individual judgement of available courses of action and a discussion within the managementgroup (the board), a vote is taken. This vote reflects the managers' strategic behaviour as a resultof personal preferences and their tendency to conform. Eight factors that influence decisionmakingwill be identified and their impact on decision quality being discussed: personal interests,incentives, qualification, group size, strategic voting behaviour, risk aversion, tendency to conform,and type of voting procedure.