Showing papers in "Journal of Economic Behavior and Organization in 1982"
TL;DR: In this paper, the ultimatum bargaining games with two players and two stages were investigated. But the authors focused on situations with two agents and two stage bargaining games and only one agent has to decide and the set of outcomes is restricted to two results.
Abstract: There are many experimental studies of bargaining behavior, but suprisingly enough nearly no attempt has been made to investigate the so-called ultimatum bargaining behavior experimentally. The special property of ultimatum bargaining games is that on every stage of the bargaining process only one player has to decide and that before the last stage the set of outcomes is already restricted to only two results. To make the ultimatum aspect obvious we concentrated on situations with two players and two stages. In the ‘easy games’ a given amount c has to be distributed among the two players, whereas in the ‘complicated games’ the players have to allocate a bundle of black and white chips with different values for both players. We performed two main experiments for easy games as well as for complicated games. By a special experiment it was investigated how the demands of subjects as player 1 are related to their acceptance decisions as player 2.
4,332 citations
TL;DR: In this paper, a cardinal utility theory with an associated set of axioms is presented, which is a generalization of the von Neumann-Morgenstern expected utility theory, which permits the analysis of phenomena associated with the distortion of subjective probability.
Abstract: A new theory of cardinal utility, with an associated set of axioms, is presented. It is a generalization of the von Neumann-Morgenstern expected utility theory, which permits the analysis of phenomena associated with the distortion of subjective probability.
2,962 citations
TL;DR: In this paper, a theory of the multiproduct firm is presented, in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets.
Abstract: This paper outlines a theory of the multiproduct firm. Important building blocks include excess capacity and its creation, market imperfections, and the peculiarities of organizational knowledge, including its fungible and taut character. A framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets. Neoclassical explanations of the multiproduct firm are shown to be seriously deficient.
1,656 citations
TL;DR: In this article, it is argued that the way in which Williamson evaluates efficiency is open to methodological and other objections, and that there is limited empirical support for his hypothesis, and the evidence suggests that the putting-out system was usually able to compete with the factory.
Abstract: An evaluation of the organizational efficiencies of various modes of production by O.E. Williamson has led him to conclude that, given identical technologies, the factory was more efficient than the putting-out system. The superior organizational efficiency of the former, he maintains, was one reason for the transition to factory production during the nineteenth century. This paper challenges that view. It is argued that the way in which Williamson evaluates efficiency is open to methodological and other objections, and that there is limited empirical support for his hypothesis. Given an identical technology, the evidence suggests that the putting-out system was usually able to compete with the factory.
135 citations
TL;DR: Five ‘rules of thumb’ appear to be reasonably good and may be fairly robust and may constitute a better explanation of actual search behaviour than do the currently popular supposedly optimal rules.
Abstract: This paper presents the findings of some preliminary ‘laboratory’ investigations into ‘actual’ search behavior. Specifically we looked at situations in which searchers' initial information about the distributions was negligible. It seemed likely that simple ‘rules of thumb’ would be used in such situations. Our findings confirmed this view: we identified five such rules which between them ‘accounted’ for a high proportion of observed behaviour. Moreover, these rules although not ‘optimal’) appear to be reasonably good and may be fairly robust; jointly, they may constitute a better explanation (and predictor) of actual search behaviour than do the currently popular supposedly optimal rules.
135 citations
TL;DR: In this paper, the authors report the results of twelve double-auction market experiments designed to analyze the effects of asymmetric induced supply and demand configurations on the price convergence path toward a competitive equilibrium.
Abstract: We report the results of twelve ‘double-auction’ market experiments designed to analyze the effects of asymmetric induced supply and demand configurations on the price convergence path toward a competitive equilibrium. The proposition (convergence bias) that prices tend to approach the competitive equilibrium from above (below) when consumer surplus is greater (less) than producer surplus cannot be rejected. We do, however, reject the proposition (convergence symmetry) that these convergence biases are of equal absolute magnitude. Excesses of producer over consumer surplus are found to have a more pronounced effect on the sequence of contract prices.
82 citations
TL;DR: In this paper, the authors explore possible reasons why "participatory" modes of organization, whole potentially viable and preferable to "hierarchical" modes for a large majority of workers, may be dominated by the latter in capitalist market economies.
Abstract: This paper explores possible reasons why ‘participatory’ modes of organization, whole potentially viable and preferable to ‘hierarchical’ modes for a large majority of workers, may be dominated by the latter in capitalist market economies. After exploring the developmental preconditions for the evolution of a mature ‘participatory’ mode, using a behavioral approach to organizations, it is suggested that since the interest of those possessing scarce managerial skills may lie with ‘hierarchical’ firms, a ‘participatory’ sector may be uncompetitive unless rights to enter labor contracts are redefined. Thus, the analysis offers a partial explanation of the political nature of the demand for workplace democracy.
75 citations
TL;DR: In this article, the fundamental instrument, man, and his state of mind, his morals, at the instant of combat, are known to an entire army, and cannot be prescribed in an army without exact knowledge.
Abstract: ‘Nothing can wisely be prescribed in an army … without exact knowledge of the fundamental instrument, man, and his state of mind, his morals, at the instant of combat’.
60 citations
TL;DR: In this article, a new method (the duplicate method) was used to induce preferences for simple majority rule procedures and with closed rule procedures, and the results of the control experiments compare favorably to those for which monetary incentives have been used.
Abstract: Committees operating with simple majority rule procedures and with closed rule procedures are studied. A new method (the duplicate method) was used to induce preferences. The results of the control experiments compare favorably to those for which monetary incentives have been used. In all cases, the core is a relatively accurate model of committee choice.
35 citations
TL;DR: In this paper, an experimental bilateral bargaining mechanism is developed for use on a computer and then studied under two types of time constraint: shortening the time of each contract negotiation period and replicating these periods over one long experimental session, a multiperiod version of the bilateral mechanism is examined.
Abstract: An experimental bilateral bargaining mechanism is developed for use on a computer and then studied under two types of time constraint. First a single buyer and single seller are allowed to negotiate a market contract during one long experimental session. The relative Pareto optimality results of these negotiations are comparable to the benchmark Siegel and Fourakel bargaining experiments. Then, by shortening the time of each contract negotiation period and replicating these periods over one long experimental session, a multiperiod version of the bilateral mechanism is examined. Using this repetitive mechanism, the occurrence of an impasse as a bargaining tool becomes important. The multiple contract Pareto optimality results and multiple impasse occurrences are then compared to the original single contract results.
26 citations
TL;DR: The rise of the great society is far too recent an event to have given man time to shed the results of a development of hundreds of thousands of years, and not to regard as artificial and inhuman those abstract rules of conduct which often conflict with the deeply ingrained instincts to let himself be guided in action by perceived needs.
Abstract: The rise of the great society is far too recent an event to have given man time to shed the results of a development of hundreds of thousands of years, and not to regard as artificial and inhuman those abstract rules of conduct which often conflict with the deeply ingrained instincts to let himself be guided in action by perceived needs. [Hayek (1976, p. 146)]
TL;DR: In this paper, the authors take the possibility of bilateral opportunism into account and in consequence exaggerate the ease of obtaining consummate cooperation, and the implication of this approach is that the removal of opportunism implies relatively organisational surgery.
Abstract: The ‘Markets and Hierarchies’ framework provides a basis for the analysis of employment relations. However, it fails to take the possibility of bilateral opportunism into account and in consequence exaggerates the ease of obtaining consummate cooperation. Once bilateral opportunism is admitted, the resolution of contractual problems becomes indeterminate, depending upon the preference and relative power of the parties. These preferences can be modelled,analysis of technological change issues reveals that such a model has some explanatory power. The implication of this approach is that the removal of opportunism implies relatively organisational surgery.
TL;DR: In this article, a solution of the problem of voluntary collective action, employing an improved concept of political entrepreneurship, is proposed, consistent with large numbers of actors and pure public goods (joint production of private goods and asymmetry are not assumed).
Abstract: A solution of the problem of voluntary collective action, employing an improved concept of political entrepreneurship is proposed. This solution is consistent with large numbers of actors and pure public goods (joint production of private goods and asymmetry are not assumed). The importance of information imperfections in producing suboptimality in the provision of public goods is emphasized. Political entrepreneurship is made to parallel the Knightian concept of the entrepreneur, emphasizing the role of risk-taking and information collecting.
TL;DR: This paper proposed that the mechanism underlying these results involves the supply of memory and that subjects are influenced by the outcomes of recent trials, but tend to respond to the evidence in a larger number of trials as reward (and hence attention) are increased.
Abstract: In a binary choice experiment, the subject predicts on a series of trials whether a particular random event will or will not occur. The results of such experiments show systematic departures from expected value maximization, but to a degree that decreases as the reward for successful prediction increases. This paper proposes that the mechanism underlying these results involves the supply of memory. Subjects are influenced by the outcomes of recent trials, but tend to respond to the evidence in a larger number of trials as reward (and hence attention) are increased. Broader conceptual issues surrounding the notion of rational choice are also discussed.
TL;DR: In this article, the authors developed the use of the core as a solution concept in game theory and gave a formulation of a mixed cooperative/non-cooperative game, in which the game will be played cooperatively within coalitions, but non-cooperatively as between coalitions.
Abstract: The paper develops the use of the core as a solution concept in game theory in two interrelated directions. In the first place, an indicator of aggressiveness of claims is introduced in a modified definition of the core. The modified core may be smaller than the usual core, and may fail to exist if aggressiveness increases beyond some critical level. In the second place the article gives a formulation of a mixed cooperative/non-cooperative game, in which the game will be played cooperatively within coalitions, but non-cooperatively as between coalitions. A mixed cooperative/non-cooperative solution obtains if the grand coalition of all players fail to materialize because the various claims are incompatible. The two directions referred to are interrelated because the level of aggressiveness may be decisive for whether or not the grand coalition, and possibly other coalitions, will break down. The final section of the paper draws some general conclusions and relates the approach to other ideas in the literature.
TL;DR: In this article, the authors examine oligopolistic price competition under the assumption that consumers are non-responsive to small price differences and prove the existence of equilibrium in which firms do not necessarily charge the same price; however some of the firms charge their monopolistic price and others charge prices close to that price.
Abstract: In the world of perfect markets consumers are assumed to respond instantly to every small price change. However, in the real world it is not clear that any small price change will have a great impact on consumers' decisions and that, regardless of their habit, they will shift from one brand to the other. The purpose of this paper is to examine oligopolistic price competition under the assumption that consumers are non-responsive to small price differences. The paper proves the existence of equilibrium in which firms do not necessarily charge the same price; however some of the firms charge their monopolistic price and others charge prices close to that price.
TL;DR: In this paper, an optimal sequential mechanism for setting the budget of a bureaucracy where the budget setter (the principal) has only partial information concerning the minimum required budget is developed. But the principal's initial information and the cost of turnover of managers is related to the expected bureaucratic slack.
Abstract: This paper develops an optimal sequential mechanism for setting the budget of a bureaucracy where the budget setter (the principal) has only partial information concerning the minimum required budget. Bureaucratic slack is constrained by the existence of managers who can replace the current manager but only at a cost due to the need to learn the job. The principal's initial information and the cost of turnover of managers is related to the expected bureaucratic slack. The principal gains information over the budget setting process, so that a previous budget level provides important information for current budget setting.
TL;DR: An information processing model of an organization in which limits of decision making are generated by ‘overload’ such that the level of organizational performance decreases in probability.
Abstract: Which conditions must be fulfilled on the level of organizational decision making to construct a theory for bounded rationality in organizations? We propose an information processing model of an organization in which limits of decision making are generated by ‘overload’ such that the level of organizational performance decreases in probability. This is a cooperative model of organizations as compared to conflict theories of organizations where game theoretic tools apply. It is probably close to the Japanese stereotype of organization or team-like organizational forms, Marschak (1974), according to which harmony prevails and implementation and incentive aspects are not the major problem. We adopt a designer’s point of view, very much akin to engineering science, which mixes normative and descriptive elements of decision making. It is hoped that the model has practical implications.
TL;DR: In this article, the authors re-examine a recent article by Grossman and Stiglitz (1980) where information production is shown to be fundamentally incompatible with decentralized market systems.
Abstract: This paper re-examines a recent article by Grossman and Stiglitz (1980) where information production is shown to be fundamentally incompatible with decentralized market systems. Based upon their model, public production of information is discussed as a natural alternative. Three main implications of the analysis are: (i) the market can be informationally efficient with public production of information, (ii) there exists an informational equilibrium and the resulting allocation is Pareto efficient, and (iii) although the optimal level of information critically depends upon information users' preferences and endowments, their complete knowledge t the societal level is not necessary for public production of information.