Becker Friedman Institute
for Research in Economics
The University of Chicago

Research. Insights. Impact. Advancing the Legacy of Chicago Economics.

Three 'Biased' Lectures on Economic Models of Internal Organization: Pricing, Politics, and Path Dependence

November 7–21, 2013

(All day)

Charles M. Harper Center, Room C07
Speakers

When economists have considered organizations, much attention has focused on the boundary of the firm, rather than on its internal structures and processes.  In these three idiosyncratic (and probably biased) lectures, Robert Gibbons focused on selected models of internal organization, beginning with

  1. Pricing: if markets get prices wrong, then the economist's job is to fix the prices, such as through an incentive contract.  But many actions in organizations cannot be priced, so we will next consider
  2. Politics: the organization is a decision process, with battles for control, lobbying those in control, and so on.  An important theme in both these lectures will be that relational contracts (i.e., informal agreements so rooted in the parties' relationship that they cannot be adjudicated by a court) are central to the efficient structure and functioning of most organizations.  Finally, we will shift from the between variation to the within, especially
  3. Path dependence, arguing that the dynamics of building and changing relational contracts provide a candidate explanation for persistent performance differences among seemingly similar enterprises.

Those who attended the entire lecture series could receive a free copy of Handbook of Organizational Economics (Gibbons and Roberts, eds.; Princeton University Press, 2013) before the lectures began.

Reading for all three lectures: Gibbons, R. (2010). "Inside Organizations: Pricing, Politics, and Path Dependence." Annual Review of Economics 2: 337–65

To download related readings for each lecture, click on the lecture title below.

November 7, 2013 (All day) November 21, 2013 (All day)