February 6, 1999 <p> We model an organization as a hierarchy of managers erected on top of a technology (here consisting of a collection of plants). In our framework, the role of a manager is to take steps to reduce the adverse consequences of shocks that affect the plants beneath him. We argue...</p>

I argue that the principal theoretical and practical drawbacks of Nash equilibrium as a solution concept are far less troublesome in problems of mechanism design than in most other applications of game theory.