Disobedience and Authority
AbstractThis paper presents a theory of the allocation of authority in an organization in which centralization is limited by the agent's ability to disobey the principal. We show that workers are given more authority when they are costly to replace or do not mind looking for another job, even if they have no better information than the principal. The allocation of authority thus depends on external market conditions as well as the information and agency problems emphasized in the literature. Evidence from a national survey of organizations shows that worker autonomy is related to separation costs as the theory predicts.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1109.
Date of creation: Nov 2006
Date of revision:
Delegation; Authority; Separation Costs; Optimal employment contracts;
Other versions of this item:
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
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