Programme PhD Term V Academic Year 2021-22

Course title Organizational Economics Area Economics Credits 1.00

Prof. Tarun Jain

Course Description & Objectives
This is a course on personnel economics, a field of labor economics concerned with employee motivation, performance and productivity within organizations. During the course, we will examine canonical models of selecting, motivating and retaining agents and the empirical evidence in support of these models. The first part of the course will discuss explicit incentives and accompanying challenges such as gaming, monitoring and job design. The second part of the course will turn to implicit incentives such as motivated agents, the importance of professional identity and the effects of social networks. Such implicit incentives are an important feature of employee productivity when performance cannot be measured well. The final part of the course will consider the impact of hiring policies and training on employee productivity. While many papers frame the research question within the firm, the lessons have wide application outside the firm as well -- in government, in non-profit and volunteer organizations, in education and health, and many other settings. In recent years, Nobel Prizes to Oliver Hart, Bengt Holmstrom, Oliver Williamson and Jean Tirole have directly referenced their contributions to organizational economics. The course will consider both theoretical models as well as empirical evidence presented in support of various models. A major consideration for students taking the course is to develop their own research on these topics. Therefore, we will critically discuss gaps in the literature and possible research topics, and then begin work on closing those gaps.

The scientific home of this course is in the economics area, so the material should appeal naturally to PhD students in economics. However, the principal-agent framework investigated in this course is at the heart of many management disciplines, and indeed much of the literature overlaps with finance, accounting, marketing, strategy, and organization behavior. For instance, shareholders as principals and CEOs and managers as agents is a common setting that finance scholars study. Accounting researchers study the motivations for auditors to complete audits carefully. Marketing scholars examine how to structure commissions to maximize salesforce productivity. In public systems, non-financial levers are important to motivate employees. Similarly, there are several examples from strategy, operations management and organizational behavior as well.