This paper investigates the implications of individuals’ mistaken beliefs of their abilities on incentives in organizations using the principal-agent model of moral hazard. The paper shows that if effort is observable, then an agent’s mistaken beliefs about own ability are always favorable...

We show that for any discount factor, there is a natural number M such that all subgame perfect equilibrium outcomes of the discounted repeated prisoners dilemma can be obtained by subgame perfect equilibrium strategies with the following property: current play depends only on the number of the...

We discuss why surprises, defined as events that happen unexpectedly or expected events that take unexpected shapes, are important to organizations and should be considered in the organizational literature. The concept of organizational surprises is unpacked on the basis of a typology built...

We characterize Nash equilibria of games with a continuum of players (Mas-Colell (1984)) in terms of approximate equilibria of large finite games. For the concept of ("; ") equilibrium in which the fraction of players not " optimizing is less than " we show that a strategy is a Nash equilibrium...

Theories of management and organization have traditionally overlooked the concept of bricolage. Focused on the rationality of resource allocation, scholars have missed the relevance of the skill of “inventing” resources from available materials. Changes in the nature of competition are,...

New horizontally-differentiated goods involving product-specific network effects are quite prevalent. Consumers market-wide preference for each of these goods typically is initially unknown. Later, as sales data begin to accumulate, agents learn market-wide preferences, which thus become common...

This paper presents a longitudinal study of interactive organizational theatre. Managers of a large home care organization used 30 instances of organizational theatre over a one year period to effect organizational change. We found that neither management, who had hoped that employees would...

The increase in income per capita is accompanied, in virtually all countries, by two changes in the structure of the economy: an increase in the share of government spending in GDP and an increase in female labor force participation. This paper suggests that the changes in female labor force...

We present a puri¯cation result for incomplete information games with a large ¯nite number of players that allows for compact metric spaces of actions and types. This result is then used to generalize the puri¯cation theorems of Schmeidler (1973), Rashid (1983) and Kalai (2004). Our proofs...

This paper complements the traditional theory of teams (Fama (1980), Holmstrom (1982a,b)) by introducing endogenous team formation by agents who are concerned with their reputations and are informed about the types of their potential teammates. Such a situation leads to a trade of between...