- Code ECON8078
- Unit Value 6 units
- Offered by Research School of Economics
- ANU College ANU College of Business and Economics
- Course subject Economics
- Areas of interest Economics, Political Economy
- Academic career PGRD
- Dr Kieron Meagher
- Mode of delivery In Person
First Semester 2021
See Future Offerings
Organisational Economics studies the design of firms and other economic institutions. It develops frameworks which are applied to the problems faced by managers and entrepreneurs. How should incentives be designed in organisations? How should an organisation optimally choose its staff, allocate individuals to tasks within the organisation and then coordinate their actions? Which tasks should be outsourced? How do the answers to these questions depend on external factors such as market competition and technological developments? Tools from game theory, information economics and behavioural economics are introduced and applied to analyse these (and other) problems.
Upon successful completion, students will have the knowledge and skills to:
- Analyse and design incentive contracts with regard to asymmetric information and non-contractibility with either performance or welfare goals.
- Evaluate the factors which determine the optimality and relative performance of authority structures in firms and institutions relative to market based solutions.
- Analyse and design decision making structures in organisations with reference to 1 and 2 above.
- Identify drivers of organisational structure and boundary choices and evaluate the welfare consequences.
The majority of economic activity occurs not in markets but in firms and other kinds of economic institutions like hospitals, schools and government agencies. This course will undertake an economic analysis of which activities occur within organisations, how these activities are structured and why. The main tools developed will be the design of incentive contracts, the theory of the firm (boundaries of the firm), models of authority relations and modern economic decision-making theory.
- Problem sets (15) [LO 1,2,3,4]
- Mid-semester exam (35) [LO 1,2,3,4]
- Final exam (50) [LO 1,2,3,4]
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2 hours of lecture and 1 hour of tutorial per week. Plus approximately 7 hours of works outside class.
Requisite and Incompatibility
Gibbons, R., and J. Roberts. 2013. R. Gibbons and J. Roberts (eds.), The Handbook of Organizational Economics. Princeton, NJ: Princeton University Press.
Bolton, P. and M. Dewatripont. 2005. Contract Theory. Cambridge, MA: M.I.T. Press.
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