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A Theory of Appeasement: Naïve Organization

Author

Listed:
  • Saha, Soumyarup
  • Banerjee, Swapnendu
  • Paul, Arindam

Abstract

We explore the optimal choice of a low-ability principal while recruiting between high-ability and low-ability agents for a particular position in an organization. The organization is naïve in the sense that it fails to shut the door to malpractice possibilities in recruitment. The agents engage in a tournament of appeasing the principal in order to get favoured prior to the recruitment process. The principal being low-ability suffers from inferiority complex vis-à-vis the high-ability (identifies with the low-ability agent) and enjoys the appeasement of the low-ability agent more vis-à-vis the high-ability. We find conditions under which the low-ability will appease more compared to the high ability. We also explore conditions under which the principal will recruit the low-ability agent, thus jeopardizing the organizational welfare.

Suggested Citation

  • Saha, Soumyarup & Banerjee, Swapnendu & Paul, Arindam, 2026. "A Theory of Appeasement: Naïve Organization," MPRA Paper 129214, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:129214
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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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