Managing Behavior: Psychology, Economics, and Experiments - Part 2: Coordinating Behavior in the Organization

Participation Prerequisites

• Your willingness to solve puzzles!

Course Content

This course focuses on systems in which several individuals have to interact with one another in order to achieve certain common goals. Because those decision-makers are somehow connected, ensuring coordination of their individual behavior toward the common goal becomes essential. Following the conceptual framework of institutional economics, we will discuss three different forms of coordination:

1. First, we consider market coordination, where individual activities are coordinated via the price mechanism. We follow basic microeconomic theory and examine the functioning of markets and the implications of market failures.
2. Second, we look at inter-organizational coordination, where long-term contracts between autonomous partners coordinate individual activities. Through the lens of transaction cost theory, we elaborate on several factors determining the usefulness of long-term contracts for coordination purposes.
3. Finally, we examine hierarchical coordination, where a central unit coordinates individual activities via commands. Following managerial economic theories, we integrate the various coordination instruments used within firms into our analysis.

Intended Learning Outcomes and Competencies

By the end of the course, you will advance your knowledge in different ways:

• Learning the influences of psychology and sociology will help you understand why and how people make decisions,
• Answering questions regarding the respective last lecture will help you to reconsider the contents discussed in class.
• Learning to write a research paper will help you to deal with a new topic and be useful for your BSc-thesis.
• Learning to analyze an experimental paper will help you to critically analyze the underlying theories.
• Learning how to design an experiment will be useful for identifying differences between theory and practice.
• Learning to speak in front of others will be useful for your university and business career.

Instruction Type

Präsenzstudium

Form of Examination

Experiment & Presentation: 60%

Experiment Summary: 10%

In-class assignments: 30%

Participation: Tiebreaker

Literature

Jost, Peter-J. (2011): The Economics of Organization and Coordination. Edward Elgar Publishing.