Incentives, Identity, and Organizational Forms

Kohei Daido

No 47, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Abstract This paper studies the optimal organizational form and the optimal type of manager by considering the nonmaterial (psychological) payoff as well as the standard material payoff for agents. I compare two organizational forms: T-form, where all agents have the same job title so that they are in a single reference group; and H-form, where one agent is appointed to be the manager and the others are subordinates who form a reference group. I show that the principal should appoint a more (less) able agent to be the manager when the effects of peer pressure are more (less) critical. In addition, I find the conditions under which H-form is more likely to be preferred to T-form. Finally, I discuss the phenomenon of the proliferation of job titles in the context of this model.

Keywords: Principal-agent Model; Multiagents; Moral Hazard; Reference Group; Peer Pressure; Identity; Proliferation of Job Titles. (search for similar items in EconPapers)
JEL-codes: B49 D82 D86 M12 M54 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-07, Revised 2009-07
New Economics Papers: this item is included in nep-bec, nep-cbe and nep-cta
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:47

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