Power dynamics in organizations

Research output: Contribution to journalArticle

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Abstract

We examine an infinitely repeated game between a principal, who has the formal authority to decide on a project, and a biased agent, who is privately informed about what projects are available. The optimal relational contract speaks to how power is earned, lost, and retained. It shows that entrenched power structures are consistent with optimal administration of power. And it provides new perspectives on why similar firms organize differently, even when those organizational differences lead to persistent differences in performance, and why established firms fail to exploit new opportunities, even when they are publicly observable.

Original languageEnglish (US)
Pages (from-to)217-241
Number of pages25
JournalAmerican Economic Journal: Microeconomics
Volume9
Issue number1
DOIs
Publication statusPublished - Jan 1 2017

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ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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