Optimal Organization

Kouroche Vafaï ()
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Kouroche Vafaï: Université Paris Descartes, Sorbonne Paris Cité

Economics Bulletin, 2012, vol. 32, issue 1, 518-527

Abstract: A contract-based model of the endogenous determination of an organization's architecture is considered where a principal has the choice between a two- and a three-level organization. Each organizational architecture is plagued with its own specific form(s) of opportunism. We derive the conditions under which opportunism in a three-level hierarchy becomes so severe as to make this architecture strictly outperformed by a two-level organization.

JEL-codes: D2 L2 (search for similar items in EconPapers)
Date: 2012-02-06
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