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Concealment as Responsibility Shifting in Overlapping Generations Organizations

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  • Tomoya Tajika

Abstract

Firms sometimes have problems with their products or management systems: problems that can lead to catastrophic events. However, while workers in these firms are often aware of these problems, they sometimes fail to report them to their superiors. This paper examines workers’ incentives for concealing problems within an overlapping generations organization consisting of a subordinate and a manager. The results reveal that concealment exhibits strategic complementarity across different generations, which can lead to multiple equilibria. Further, imposing punishment and rewards on managers may paradoxically increase the motivation for concealment (JEL D23, D82, M51).

Suggested Citation

  • Tomoya Tajika, 2022. "Concealment as Responsibility Shifting in Overlapping Generations Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 38(2), pages 511-538.
    • Handle: RePEc:oup:jleorg:v:38:y:2022:i:2:p:511-538.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewab023
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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