Corporate Downsizing to Rebuild Team Spirit: How Costly Voting Can Foster Cooperation
AbstractWe propose a new mechanism to achieve coordination through voting, for which we discuss a number of real-life applications. Among them, the mechanism provides for a new theory for downsizing in organizations. A crisis may lead to a decrease in the willingness to cooperate in an organization, and therefore to a bad equilibrium. A consensual downsizing episode may signal credibly that survivors are willing to cooperate, and thus, it may be optimal and efficiency-enhancing (for the individuals remaining in the organization), as the empirical evidence suggests. A variation of the same mechanism leads to "efficient" upsizing. (JEL: C70, D70, M50) (c) 2007 by the European Economic Association.
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Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 5 (2007)
Issue (Month): 5 (09)
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Other versions of this item:
- Cabrales, Antonio & Calvó-Armengol, Antoni, . "Corporate Downsizing to Rebuild Team Spirit: How Costly Voting Can Foster Cooperation," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3793, Universidad Carlos III de Madrid.
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- M50 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - General
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