IDEAS home Printed from https://ideas.repec.org/p/fip/fedmsr/430.html
   My bibliography  Save this paper

Reputation from nested activities: the inefficient effects of scapegoating

Author

Abstract

Scapegoating is often said to be a source of inefficiency in organizations. In this paper, I analyze the consequences of scapegoating within a firm in a model where reputation concerns drive the actions of superiors. Consider delegation choices, for example. Hiring efficient workers may be a good idea if successful production is the only way to build reputation. But if successful scapegoating also increases reputation, superiors will tend to hire less efficient workers and will eventually blame them for failures. I characterize scapegoating as an activity \\"nested\\" after failures. Even though the results of scapegoating do not affect welfare directly, they do so indirectly through the decisions governing the probability of success in production. We examine how activities \\"nested\\" after good results may increase efficiency without relying on costly incentives and why superiors tend to hire better workers during good times.

Suggested Citation

  • Guillermo Ordoñez, 2009. "Reputation from nested activities: the inefficient effects of scapegoating," Staff Report 430, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:430
    as

    Download full text from publisher

    File URL: http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4240
    Download Restriction: no
    File URL: http://www.minneapolisfed.org/research/SR/SR430.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Productivity;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedmsr:430. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jannelle Ruswick (email available below). General contact details of provider: https://edirc.repec.org/data/cfrbmus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.