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Context and Aggregation: An Experimental Study of Bias and Discrimination in Organizational Decisions

Author

Listed:
  • Michael Christensen

    (Strategic Organization Design Unit, University of Southern Denmark, DK-5230 Odense M, Denmark)

  • Christian M. Dahl

    (Department of Economics, University of Southern Denmark, DK-5230 Odense M, Denmark)

  • Thorbjørn Knudsen

    (Strategic Organization Design Unit, University of Southern Denmark, DK-5230 Odense M, Denmark; Frankfurt School of Finance and Management; Danish Institute for Advanced Study, University of Southern Denmark, DK-5230 Odense M, Denmark)

  • Massimo Warglien

    (Center for Experimental Research in Management and Economics, Department of Management, Ca' Foscari University of Venice, 30123 Venice, Italy)

Abstract

This paper addresses a notable gap at the intersection of organizational economics and organization science: how does organizational context influence aggregation of individual behavior in organizational decisions? Using basic centralized versus decentralized organizational structures as building blocks for our experimental design, we examine whether assignment of organizational positions, incentive schemes, and structural configuration induce endogenous adaptation in the form of change in reservation levels (bias) or modified discrimination capability in subjects’ behavior. We found that evaluators adapted their reservation and discrimination levels in centralized structures, whereas they did not generally adapt their reservation and discrimination levels when placed in decentralized structures. We identify mechanisms that explain these findings; explain how they influence aggregate, organizational behavior; and discuss implications for research and practice.

Suggested Citation

  • Michael Christensen & Christian M. Dahl & Thorbjørn Knudsen & Massimo Warglien, 2023. "Context and Aggregation: An Experimental Study of Bias and Discrimination in Organizational Decisions," Organization Science, INFORMS, vol. 34(6), pages 2163-2181, November.
    • Handle: RePEc:inm:ororsc:v:34:y:2023:i:6:p:2163-2181
    DOI: 10.1287/orsc.2021.1502
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