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 Mondays from 9:00am-11:45am. 


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: September 30 2019)

Incentives in Organizations, Part I (Updated: September 30 2019): Risk-Incentives Trade-off; Limited Liability; Misaligned Performance Measures

Lecture Notes From Previous Years

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

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 September 30, 2019)

Week 1--Mon, Sep 30: Introduction to Organizational Economics; Risk--Incentives Trade-off; Limited Liability

Week 2--Mon, Oct 7: Misaligned Performance Measures; Career Concerns

Week 3--Mon, Oct 14: Relational Incentive Contracts; Competition and Relational Incentive Contracts

Week 4--Mon, Oct 21: Discussion of Hewlett-Packard Case; Competition and Managerial Incentives

Week 5--Mon, Oct 28: Firm Boundaries; Transaction Cost Economics
Sun, Nov 3: First model-development essay due

Week 6--Mon, Nov 4: Property Rights Theory; Foundations of Incomplete Contracts; Organizational IO

Week 7--Mon, Nov 11: Communication; Mechanism-Design Approach to Delegation; Delegation

Week 8--Mon, Nov 18: Internal Labor Markets

Week 9--Mon, Dec 2: Span of Control; Knowledge Hierarchies; Presentations

Week 10--TBD: Presentations