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A Theory of Bureaucratization Based on Reciprocity and Collusive Behavior


  • Martimort, David


This paper addresses how an organization becomes a bureaucracy. Bureaucratization emerges from a self-enforced norm of reciprocity between agents in an organization who exchange favors and promote subgoals which differ from the objective of the firm. Such collusive behavior becomes harder and harder to prevent over time. As a result, incentive schemes lose their flexibility and bureaucratization becomes a necessary equilibrium phenomenon in the long run. The distribution of agents' private information, their preferences for the future, and the force of the social norm of reciprocity are analyzed in terms of their effects on the long-run behavior of the organization and on the speed of the bureaucratization process. Copyright 1997 by The editors of the Scandinavian Journal of Economics.

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  • Martimort, David, 1997. " A Theory of Bureaucratization Based on Reciprocity and Collusive Behavior," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(4), pages 555-579, December.
  • Handle: RePEc:bla:scandj:v:99:y:1997:i:4:p:555-79

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    References listed on IDEAS

    1. Alan B. Krueger, 1999. "Experimental Estimates of Education Production Functions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 497-532.
    2. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
    3. Edward P. Lazear, 2001. "Educational Production," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 777-803.
    4. Alan B. Krueger, 2003. "Economic Considerations and Class Size," Economic Journal, Royal Economic Society, vol. 113(485), pages 34-63, February.
    5. Mikael Lindahl, 2005. "Home versus School Learning: A New Approach to Estimating the Effect of Class Size on Achievement," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 375-394, June.
    6. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
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    Cited by:

    1. Axel Gautier & Dimitri Paolini, 2007. "Delegation and Information Revelation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 574-597, December.
    2. Dongsoo Shin, 2008. "Collusion and Outcome Equivalency," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 449-459, September.
    3. Brunk, Gregory G. & Hunter, Kennith G., 2008. "An ecological perspective on interest groups and economic stagnation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 194-212, February.
    4. Falk, Armin & Gächter, Simon, 2001. "Reputation and Reciprocity: Consequences for Labour Relations," CEPR Discussion Papers 3018, C.E.P.R. Discussion Papers.
    5. POITEVIN, Michel, 2000. "Innis Lecture: Can the Theory of Incentives Explain Decentralization?," Cahiers de recherche 2000-13, Universite de Montreal, Departement de sciences economiques.
    6. Simon Gaechter & Armin Falk, 2001. "Reputation or Reciprocity? An Experimental Investigation," CESifo Working Paper Series 496, CESifo Group Munich.

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