Economics, Organization and Management

ISBN-10: 0132246503

ISBN-13: 9780132246507

Edition: 1992

Authors: Paul Milgrom, John Roberts

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A systematic treatment of the economics of the modern firm, this book draws on the insights of a variety of areas in modern economics and other disciplines, but presents a coherent, consistent, innovative treatment of the central problems in organizations of motivating people and coordinating their activities.KEY TOPICS:Introduces the fundamental problems organizations encounter and explains why they occur. Discusses a number of patterns of response — showing why organizations are structured as they are, why they adopt the policies they do, and how they solve organizational problems themselves.
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Book details

List price: $124.40
Copyright year: 1992
Publisher: Prentice Hall PTR
Publication date: 2/1/1992
Binding: Hardcover
Pages: 600
Size: 8.25" wide x 10.25" long x 1.25" tall
Weight: 2.662
Language: English

The Problem of Economic Organization
Does Organization Matter?
Business Organization
Crisis and Change at General Motors
The Hudsons' Bay Company
The Northwest Company
Organizational Strategies of Modern Firms
Salomon Brothers and the Investment Banking Industry
The Changing Economies of Eastern Europe
Recent History
Building Socialism
The Collapse of Communism
Patterns of Organizational Success and Failure
Economic Organization and Efficiency
Economic Organizations: A Perspective
Formal Organizations
The Level of Analysis: Transactions and Individuals
The Concept of Efficiency
Efficiency of Resource Allocations
Efficiency of Organizations
Efficiency as a Positive Principle
The Tasks of Coordination and Motivation
The Need for Information
Organizational Methods for Achieving Coordination
Transactions Costs Analysis
Types of Transaction Costs
Dimensions of Transactions
Limits of the Transaction Costs Approach
Wealth Effects, Value Maximation and the Coase Theorem
The Value Maximization Principle
The Coase Theorem
The Transaction Costs Approach versus Alternative Views
Organizational Objectives
Profit Maximization
Other Goals and Stakeholders' Interests
Modelling Human Motivation and Behavior
Rationality-Based Theories
Case Study: Coordination, Motivation, and Efficiency in the Market for Medical Interns
Matching Problems and Failed Solutions
The Nation Intern Matching Program
The Evolution and Persistence of Organizational Forms
Coordination: Markets and Management
Using Prices for Coordination and Motivation
Prices and Coordination
One Objective and a Single Scarce Resource
A Market-Clearing Interpretation
Extensions and Difficulties
The Fundamental Theorem of Welfare Economics
The Neoclassical Model of a Private Ownership Economy
Scope of the Neoclassical Model
Incentives and Information Transfer Under Market Institutions
Incentives in Markets
Informational Efficiency of Markets
The Neoclassical Model and Theories of Organization
Market Failures
Market Failures and Organization
Using the Price System within Organizations
Patterns of Internal Organization in Firms
Transfer Pricing in Multidivisional Firms
Coordinating Plans and Action
The Variety of Coordination Problems and Solutions
Design Attributes
Innovation Attributes
Comparing Coordination Schemes
Prices versus Quantities: Assessing Brittleness
Some Examples
A Mathematical Formulation and Analysis
Constant and Increasing Returns to Scale
Economizing on Information and Communication
The Informational Requirements of Production Planning
Judging Informational Efficiency
Planning with Design Attributes
Coordination and Business Strategy
Scale, Scope, and Core Competencies of the Firm
Complementarities and Design Decisions
Complementarities, Innovation Attributes, and Coordination Failure
Management, Decentralization, and the Means of Coordination
Centralization and Decentralization
The Role of Management in Coordination
Motivation: Contracts, Information, and Incentives
Bounded Rationality and Private Information
Perfect, Complete Contracts
The Requirements of Complete Contracting
The Problems of Actual Contracting
Bounded Rationality and Contractual Incompleteness
Bounded Rationality
Contractual Responses to Bounded Rationality
Effects of Contractual Incompleteness
Investments and Specific Assets
Achieving Commitment
Private Information and Precontractual Opportunism
Bargaining over a Sale
Incentive Efficiency
Efficient Agreements with Large Numbers of Participants
Bargaining Costs
Measurement Costs and Investments in Bargaining Position
The De Beers Diamond Monopoly
Investing in Bargaining Advantages
Adverse Selection
Adverse Selection and the Closing of Markets
Adverse Selection and Rationing
Signalling, Screening and Self-Selection
Moral Hazard and Performance Incentives
The Concept of Moral Hazard
Insurance and Misbehavior
Efficiency Effects of Moral Hazard
The Incidence of Moral Hazard
Case Study: The U.S. Savings and Loan Crisis
The Savings and Loan Industry
Deposit Insurance and Risk Taking: An Example
Incentives for Risk Taking with Borrowed Funds
The Perverse Effect of Competition
Fraud in the SandLs
Who's to Blame?
Public versus Private Insurance
Other U.S. Government Insurance and Guarantee Programs
Private or Public Insurance?
Moral Hazard in Private Life Insurance
Moral Hazard in Organizations
Moral Hazard and Employee Shirking
Managerial Misbehavior
Moral Hazard in Financial Contracts
Controlling Moral Hazard
Explicit Incentive Contracts
Do-It-Yourself, Ownership Changes, and Organizational Redesign
Influence Activities and Unified Ownership
Unified Ownership and Selective Intervention
Influencing Interventions
Influence Costs and Failed Mergers
Efficient Incentives: Contracts and Ownership
Risk Sharing and Incentive Contracts
Incentive Contracts As a Response to Moral Hazard
Sources of Randomness
Balancing Risks and Incentives
Decisions Under Uncertainty and the Evaluation of Financial Risks
Computing Means and Variances
Certainty Equivalents and Risk Premia
Risk Premia and Value Maximization
Risk Sharing and Insurance
How Insurance Reduces the Cost of Bearing Risk
Efficient Risk Sharing: A Mathematical Example
Optimal Risk Sharing Ignoring Incentives
Principles of Incentive Pay
Basing Pay on Measured Performance
A Model of Incentive Compensation
The Informativeness Principle
The Incentive-Intensity Principle
The Monitoring Intensity Principle
The Equal Compensation Principle
Intertemporal Incentives: The Ratchet Effect
Moral Hazard with Risk-Neutral Agents
Problems with the Risk-Neutral Agent Scenario
Rents and Efficiency
When Distribution Affects Efficiency
Efficiency Wages for Employment Incentives
The Shapiro-Stiglitz Model
A Mathematical Example: Comparative Statics for Efficiency Wages
A Marxian View of Efficiency Wages
Additional Aspects and Applications of Efficiency Wage Theory
Reputations as Contract Enforcers
The Elementary Theory: Reputations in Repeated Transactions
Ambiguity, Complexity, and Limits of Reputations
The Advanced Theory: Reputations Aided by Institutions
Rent-Seeking, Influence Costs and Efficient Decision Routines
Rents and Quasi-rents
Rent Seeking in the Public and Private Sectors
Organizational Design: Optimizing Influence Activities
Influence Costs and the Legal System
Participatory Management
Ownership and Property Rights
The Concept of Ownership
Residual Control
Residual Returns
Pairing Residual Control and Returns
The Coase Theorem Reconsidered
Ill-Defined Property Rights and the Tragedy of the Commons
Untradable and Insecure Property Rights
Bargaining Costs and the Limits of the Coase Theorem
Legal Impediments to Trade
Transaction Costs and the Efficient Assignment of Ownership Claims
The Ethics of Private Property
Predicting Asset Ownership
Asset Specificity and the Hold-Up Problem
Uncertainty and Complexity
Frequency and Duration
Difficulty of Performance Measurement
Human Capital
Ownership of Complex Assets
Owning Complex Return Streams
Who Owns a Public Corporation?
Whose Interests Should Count?
Employment: Contracts, Compensation, and Careers
Employment Policy and Human Resource Management
The Classical Theory of Wages, Employment, and Human Capital
Wages and Levels of Employment
Human Capital
Defects of the Classical Model
Labor Contracts and the Employment Relationship
Employment as a Relationship
Employment Contracts
Implicit Contracts
Risk Sharing in Employment Relations
Borrowing and Lending in Employment Relationships
Recruitment, Retention and Separation
Case Study: Human-Resource Policies in Japan
Hiring and Retention
Protecting Interests of Permanent Employees
Internal Labor Markets, Job Assignments, and Promotions
Internal Labor Markets
Labor Market Segmentation Patterns
Pay in Internal Labor Markets
The Rationale for Internal Labor Markets
Long-Term Employment
Firm Specific Human Capital
Promotion Policies
Pay Attached to Jobs
Internal Labor Markets as Systems
Influence Costs, Incentives, and Job Assignment
A Job-Assignment Problem
Organizational Responses
Tenure and Up-Or-Out Rules
Up-Or-Out Rules
Compensation and Motivation
The Forms and Functions of Compensation
Differing Forms of Pay
The Objective of Compensation Policy
Incentives for Individual Performance
What to Motivate?
Explicit Incentive Pay
Piece Rates
Sales Commissions
Individual Incentive Pay in Other Contexts
Eliciting Employees' Private Information
Implicit Incentive Pay
Performance Evaluation
Performance Evaluation with Explicit Performance Pay
Performance Evaluation in Subjective Systems
Job Design
Job Design and Incentive Pay
Job Enrichment Programs and Complementarities Between Tasks
Responsibility and Personal Business
Incentive Pay for Groups of Employees
Forms of Group Incentives
The Effectiveness of Group Incentive Contracts
Pay Equity and Fairness
Executive and Managerial Compensation
Patterns and Trends in Executive Compensation
CEO Compensation in Large U.S. Firms
Patterns and Comparisons
Middle-Level Executives
Motivating Risk-Taking
The Puzzle
Managerial Investment Decisions and Human Capital Risk
Inducing Risk Taking
Paying for Investment Proposals
Deferred Compensation
Commitment Problems
Performance Pay for CEOs?
Setting CEO Pay
The Debate on Executive Compensation
The Tasks and Temptations Facing Senior Executives
Value Maximization and Incentives
The Evidence on Performance and Pay
Does CEO Pay Affect Performance
Implications and Conclusions
Finance: Investments, Capital Structure, and Corporate Control
The Classical Theory of Investments and Finance
The Classical Economics of Investment Decisions
The Fisher Separation Theorem
Net Present Values
Strategic Investments as Design Decisions
Classical Analyses of Financial Structure Decisions
The Modigliani-Miller Analyses
The Allocation of Investment Capital by Markets
Investment Risk and the Cost of Capital
Risk and Return
The Capital Asset Pricing Model
Expectations, Asset Pricing, and Efficiency
Information and the Prices of Financial Assets
Forms of the Efficient Market Hypothesis
Evidence on the Efficient Markets Hypothesis
Shortsighted Markets and Shortsighted Management
Implications of the New Theories for Organizations
Financial Structure, Ownership, and Corporate Control
Changes in Corporate Control: Patterns and Controversies
Corporate Control Changes in the 1980s
The Rise of Debt
The Debate
International Patterns of Financing and Ownership
Financial Structure and Incentives
Conflicting Interests: Managers versus Owners
Conflicting Interests: Current Lenders versus Other Capital Suppliers
Owners' Incentive for Monitoring
Monitoring Incentives for Lenders
Default and Bankruptcy Costs
Financial Structure, Incentives, and Value
Signalling and Financial Decisions
Debt and Equity
Dividends, Monitoring, and Signaling
Objectives in Selecting Financial Structure
Corporate Control
The Mechanics of Control
Takeovers and Restructurings in the United States in the 1980s
Takeover Defenses
The Aftermath
Alternatives to the Publicly Held Corporation
Charitable Activities and Not-for-Profit Organizations
The Design and Dynamics of Organizations
The Boundaries and Structure of the Firm
The Changing Nature of the Firm
Emergence of the Industrial Enterprise
The Development of the Multidivisional Form
The Multiproduct Firm
Drivers of Change: Complementarities and Momentum
The Internal Structure of the Firm
Advantages of the Multidivisional Form
Problems of Managing a Divisionalized Firm
Vertical Boundaries and Relations
Advantages of Simple Market Procurement
Advantages of Vertical Integration
Alternative Vertical Relations
Horizontal Scope and Structure
Competitive Strategy and Organizational Innovation
Directions of Divisional Expansion
Disadvantages of Horizontal Integration
Business Alliances
The Evolution of Business and Economic Systems
The Present and Future of the Business Firm
Technological and Organizational Change in Manufacturing
The Service Industries
Globalization of Economic Activity
Innovations in Ownership, Financing and Control
Human Resources
The Present and Future of Economic Restructuring in Eastern Europe and the USSR
The Communist and Capitalist Systems
Managing the Transition
The Future of Economics, Organization, and Management
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*A minimum purchase of $35 is required. Shipping is provided via FedEx SmartPost® and FedEx Express Saver®. Average delivery time is 1 – 5 business days, but is not guaranteed in that timeframe. Also allow 1 - 2 days for processing. Free shipping is eligible only in the continental United States and excludes Hawaii, Alaska and Puerto Rico. FedEx service marks used by permission."Marketplace" orders are not eligible for free or discounted shipping.

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