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Organizational Concealment: An Incentive of Reducing the Responsibility

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  • Tajika, Tomoya
  • 多鹿, 智哉

Abstract

We studyworkers’ incentives of reporting problems within an OLG organization consisting of a subordinate and a manager. The subordinate is responsible for reporting a problem, and the manager is responsible for solving the reported problem. The subordinate has an incentive to conceal a detected problem since if he reports it but the manager is too lazy to solve the problem, the responsibility is transferred to the subordinate since he becomes a manager in the next period. We show that concealment is more likely either if subordinates are farsighted or the problem’s growth rate increases over time.

Suggested Citation

  • Tajika, Tomoya & 多鹿, 智哉, 2017. "Organizational Concealment: An Incentive of Reducing the Responsibility," Discussion Paper Series 667, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hituec:667
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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