A theory of organizational dynamics: Internal politics and efficiency

Hongbin Cai; Hong Feng; Xi Weng

doi:10.1257/mic.20160237

A theory of organizational dynamics: Internal politics and efficiency

Hongbin Cai
, Hong Feng
, Xi Weng^*

^*Corresponding author for this work

Peking University
Shenzhen University

Research output: Contribution to journal › Article › peer-review

Abstract

We consider a three-member organization in which one member retires in each period and the incumbent members vote to admit a candidate to fill the vacancy. Candidates differ in quality and belong to one of two types, and majority-type members share the total rent of that period. We characterize the symmetric Markov equilibria with undominated strategies and compare the long-term welfare among them. Unanimity voting is better than majority voting at promoting long-term welfare. In addition, organizations with a certain degree of incongruity perform better in the long run than either harmonious or very divided organizations.

Original language	English
Pages (from-to)	94-130
Number of pages	37
Journal	American Economic Journal: Microeconomics
Volume	10
Issue number	4
DOIs	https://doi.org/10.1257/mic.20160237
State	Published - 1 Nov 2018
Externally published	Yes

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A theory of organizational dynamics: Internal politics and efficiency

Abstract

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