LFU:online

Recent research has demonstrated that the quality of organizational design (i.e. how individuals communicate, coordinate, and cooperate within an institution and on its behalf) is a key driver of performance. This holds at the level of national economies as well as for enterprizes or public institutions. In this course, students will learn how to analyze and compare different institutional designs (e.g., payment schemes, communication paradigms, contracts) and how to improve institutions with good design choices. On the way, students will get an overview of key-concepts of (behavioral) organizational economics, will learn how to critically assess real-life organizations and research in organizational economics, and will conduct their own research project on an organizational friction of their own choice. The reserach project contains the identification of an organizational friction in a real-world institution, a proposal for improvement, and the design of an empirical test to analyze the actual impact of the proposed changes.

The course is an introduction to behavioral organizational economics. It asks why some institutions (national economies, enterprizes, public institutions) are more successful (in various dimensions) than others and offers insights from microeconomics, game theory and behavioral/experimental economics) as (partial) explanations. Organizational designs and interventions are discussed that target (i) individual decisions, preferences, and (societal) norms, (ii) informal institutions (e.g., authority, relationships), and (iii) formal institutions (e.g. contracts, property rights, market rules) to improve collective efforts in an organization. Specifically, students will be introduced to a framework that identifies organizational frictions, proposes organizational adaptations, and test the impact of the proposed design changes within the organization.

Presentation and discussion of key-concepts and landmark case studies; acting as a referee for a research paper; identifying and presenting organizational changes; developing an impact evaluation for poposed organizaional changes.

Student presentations (to referee a paper and to present an idea for organizational design), in-class participation (discussion of concepts, papers, and design ideas), final paper, oral exam.

Main reference: Elligsen, Tore (2024), Institutional and organizational economics: A behavioral game theory introduction, Cambridge Policy Press. Research papers will be provided on the OLaT pages at the beginning of the term.

Students need to have successfully taken the courses on microeconomics and game theory. It is beneficial to take the course in experimental methods together with this course.

The course consists of two parts: In the first part until Christmas, key-concepts will be discussed in the lecturers and landmark applications will be presented by students. After Christmas, students work on their own idea of an organizational design, present and discuss their ideas in-class, and prepare a final paper on an impact evaluation. All course parts (key-concepts, applications, own organizational design incl. impact evaluation) will be discussed in a final oral exam.