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A Theory of Bureaucratization Based on Reciprocity and Collusive Behavior

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  • Martimort, David

Abstract

This paper addresses how an organization becomes a bureaucracy. Bureaucratization emerges from a self-enforced norm of reciprocity between agents in an organization who exchange favors and promote subgoals which differ from the objective of the firm. Such collusive behavior becomes harder and harder to prevent over time. As a result, incentive schemes lose their flexibility and bureaucratization becomes a necessary equilibrium phenomenon in the long run. The distribution of agents' private information, their preferences for the future, and the force of the social norm of reciprocity are analyzed in terms of their effects on the long-run behavior of the organization and on the speed of the bureaucratization process. Copyright 1997 by The editors of the Scandinavian Journal of Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 99 (1997)
Issue (Month): 4 (December)
Pages: 555-79

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Handle: RePEc:bla:scandj:v:99:y:1997:i:4:p:555-79

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Axel Gautier & Dimitri Paolini, 2007. "Delegation and Information Revelation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 574-597, December.
  2. Falk, Armin & Gächter, Simon, 2001. "Reputation and Reciprocity: Consequences for Labour Relations," CEPR Discussion Papers 3018, C.E.P.R. Discussion Papers.
  3. POITEVIN, Michel, 2000. "Innis Lecture: Can the Theory of Incentives Explain Decentralization?," Cahiers de recherche 2000-13, Universite de Montreal, Departement de sciences economiques.
  4. Simon Gaechter & Armin Falk, 2001. "Reputation or Reciprocity? An Experimental Investigation," CESifo Working Paper Series 496, CESifo Group Munich.
  5. Brunk, Gregory G. & Hunter, Kennith G., 2008. "An ecological perspective on interest groups and economic stagnation," The Journal of Socio-Economics, Elsevier, vol. 37(1), pages 194-212, February.

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