This essay begins with introductions to the two sides of organizational economics: the economics of internal organization (which focuses on the internal structure and functioning of organizations) and the economic theory of the firm (which focuses on organizations' boundaries and on relationships across these boundaries). Taken literally, these issues are only loosely related to the conference theme of "How Humans Behave," but the author does see a high-level parallel: both behavioral economics and organizational economics are investigating new approaches to modeling economic actors (individuals and firms, respectively). After these introductions to the two sides of organizational economics, the author then tries to connect "How Humans Behave" and "How Organizations Behave." In particular, he offers quick observations (hoping to prompt longer discussions) about (a) applying behavioral models in organizational settings and (b) how organizational settings might warrant new behavioral models. Finally, in an attempt to connect to economic policy, the author considers (c) what do organizations do, and whether it matters that these activities are conducted within organizations (rather than outside).
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Weber, Roberto & Camerer, Colin F. & Knez, Marc, 1996.
"The Illusion of Leadership,"
Working Papers
992, California Institute of Technology, Division of the Humanities and Social Sciences.
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