Context and Aggregation: An Experimental Study of Bias and Discrimination in Organizational Decisions

Michael Christensen (), Christian Dahl, Thorbjørn Knudsen () and Massimo Warglien ()
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Michael Christensen: Strategic Organization Design Unit, University of Southern Denmark, DK-5230 Odense M, Denmark
Thorbjørn Knudsen: Strategic Organization Design Unit, University of Southern Denmark, DK-5230 Odense M, Denmark; Frankfurt School of Finance and Management; Danish Institute for Advanced Study, University of Southern Denmark, DK-5230 Odense M, Denmark
Massimo Warglien: Center for Experimental Research in Management and Economics, Department of Management, Ca' Foscari University of Venice, 30123 Venice, Italy

Organization Science, 2023, vol. 34, issue 6, 2163-2181

Abstract: This paper addresses a notable gap at the intersection of organizational economics and organization science: how does organizational context influence aggregation of individual behavior in organizational decisions? Using basic centralized versus decentralized organizational structures as building blocks for our experimental design, we examine whether assignment of organizational positions, incentive schemes, and structural configuration induce endogenous adaptation in the form of change in reservation levels (bias) or modified discrimination capability in subjects’ behavior. We found that evaluators adapted their reservation and discrimination levels in centralized structures, whereas they did not generally adapt their reservation and discrimination levels when placed in decentralized structures. We identify mechanisms that explain these findings; explain how they influence aggregate, organizational behavior; and discuss implications for research and practice.

Keywords: decision making; organizational behavior; organizational design; laboratory research; experimental designs; research design and methods (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:34:y:2023:i:6:p:2163-2181

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