MECS 570-1: Organizational Economics I: Organizations and Markets

This is the first course in a two-course sequence in Organizational Economics. It provides an introduction to the field and focuses on issues of incentive provision, decision making, firm boundaries, organizational structures and processes, and the interaction between firm organization and the broader economy. Below is the syllabus, an outline of the course, and a series of lecture notes. The class meets in the Global Hub, room 4301 on Thursdays from 3:30pm-6:30pm. 


Lecture Notes

Collection of Lecture Notes for Spring, 2018: Contains all the notes below, a couple other topics from previous quarters, and a few topics from 570-2.

Introduction (Updated: January 10 2019)

Incentives in Organizations, Part I (Updated: January 10 2019): Risk-Incentives Trade-off; Limited Liability; Misaligned Performance Measures

Incentives in Organizations, Part II (Updated: January 17th, 2019): Career Concerns; Relational Incentive Contracts

Competition and Organization (Updated: January 24th, 2019): Competition and Managerial Incentives

Boundaries of the Firm, Part I (Updated: February 7th, 2019): Introduction; Transaction-Cost Economics; Property Rights Theory

Boundaries of the Firm, Part II (Updated: February 13th, 2019): Foundations of Incomplete Contracts; Influence Costs; Organizational Industrial Organization

Careers in Organizations (Updated: February 21st, 2019): Internal Labor Markets

Lecture Notes From Previous Years

Decision Making in Organizations, Part I (Updated: February 16th, 2017): Mechanism-Design Approach to Delegation

Decision Making in Organizations, Part II (Updated: February 21st, 2017): Delegating Non-Contractible Decisions

Organizational Structure, Part I (Updated: February 24th, 2017): Span of Control, Knowledge Hierarchies

Organizational Structure, Part II (Updated: February 28th, 2017): Knowledge Hierarchies and Inequality; Monitoring Hierarchies

Performance Differences (Updated: May 13th, 2015): Productivity Measures

Relational Incentive Contracts (Updated: May 24th, 2015): Sequential Inefficiencies in Formal and Relational Contracts (by Dan Barron)

Schedule (updated January 10, 2019)

Week 1--Thurs, Jan 10: Introduction to Organizational Economics; Risk--Incentives Trade-off; Limited Liability

Week 2--Thurs, Jan 17: Misaligned Performance Measures; Career Concerns; Relational Incentive Contracts

Week 3--Thursday, Jan 24: Competition and Relational Incentive Contracts; Competition and Managerial Incentives

Week 4--Thurs, Jan 31: Discussion of Hewlett-Packard Case; Firm Boundaries; Transaction Cost Economics

Week 5--Thurs, Feb 7: Property Rights Theory; Foundations of Incomplete Contracts; Organizational IO
Sun, Feb 10: First model-development essay due

Week 6--Thurs, Feb 14: Communication; Mechanism-Design Approach to Delegation

Week 7--Thursday, Feb 21: Span of Control; Knowledge Hierarchies; Knowledge Hierarchies in Equilibrium

Week 8--Thursday, Feb 28: Monitoring Hierarchies and Firm Size; Presentations

Week 9--Thursday, Mar 7: Guest Lecture

Week 10--Thursday, Mar 14: Internal Labor Markets; Presentations