The course aims to develop and deepen the understanding of how the internal organization of firms works. One may imagine a firm as a web of social and economic ties in which several players make many decisions day in day out. For instance, workers decide how much effort to put in their work; managers decide who to promote and hire; firm owners choose how much decision-making power should rest with the employees. In this course, we will look at these decisions through the lens of an economist. Doing so will help us gain insight into the behavior of these individuals in a unique economic setting. The course begins with a description of the origins and the scope of organizational economics. We then proceed to "build" the firm inside out --- the first topic is understanding the firm's boundaries. We then continue to understand the basics of contract theory, i.e., how firms hire and fire workers. Next, we consider decision-making in organizations, followed by a discussion on the notion of authority in firms. Finally, we will look at the role of culture, language, management, and leadership in organizations. While we will predominantly discuss theoretical studies, we will also look at some relevant empirical and experimental literature.
