Week 4: Organizational Design and Organizational Culture Flashcards
agenda setting
setter chooses an alternative policy. voters vote b/w alternative and status quo.
example: zero-based budgeting in US schools 1970s. +: increased deliberation and purged group influence embedded in past budgets.
focal points example
NY, LA, SF game played in class
Culture as selecting equilibria
repeated games: trust game
cynical equil.
grim trigger
employee: trust, don’t trust.
employer: abuse, don’t abuse
cynical: always don’t trust, always abuse
grim: trust until abused, then never trust
subjective performance contract AKA _____. unlike standard contract, subj. perf. contract:
example.
relational contract.
doesn’t require third party enforcement
example: principal evaluation of teacher are best predictor of quality. problems: if bonus is big, create incentives for boss to renege. also creates incentives to lobby for better evaluations
Type I error
reject null hypothesis when it’s true
Type II error
accept null hypothesis when it’s false
avoiding type II error requires that all components succeed (in rocket launches, any safety unit can cancel launch).
strategic redundancy. multiple agents can be less effective than one. So principal should…
(1) reward agent performance - through subjective performance evaluation or an explicit contract
Median voter theorem:
Median voter theorem: one implicit assumption is that the median’s preferred policy is on the agenda, and IF it gets on the agenda it will win out over anything else. This applies when no player has a lot of agenda power.
Setter Model
Setter Model.
If a player does have a lot of agenda power, then, first, a setter chooses a policy. Status quo vs. setter’s policy. The setter model actually described the budget process of some public sector agencies
Zero based budgeting
Zero based budgeting. School board would set budget, propose to voters after default budget of zero. it was thought that this would increase deliberation. start from the ground up every year. Group C will always try to set budget as high as possible – but to the point where B is indifferent and will agree to C (over 0).
Culture as focal point
One role of culture may be of providing the focal point for us. A way of understanding what to do with certain situations when we do need to coordinate. E.g. opening a gift while the giver is there or after the giver leaves. no approach is better than the other, what matter is what the agreement is on appropriate behaviors.
grim trigger
grim trigger. i will keep trusting until the first time that you abuse my trust, then for the rest of the time, i will not trust you. so, the employers strategy is I will not abuse the trust until … if delta is sufficiently high, then the boss will continue to not abuse. if hyperbolic discounting, your impatient means you’ll be more likely to abuse.
cynical equilbrium
cynical equilibrium: always don’t trust, always abuse
Folk Theorems
Folk Theorems: for most games, many equilibria exist. payoffs for all the players have to be better than payoffs from playing the game just once. if anyone deviates, then we punish that player.
Type I vs Type II error example
Tradeoff - you can do things that avoid Type ___ errors, but you are correspondingly increasingly the probability of Type __ errors.
Null hypothesis = presumption of innocence.
Type 1 = convicting the innocent
Type 2 = letting the guilty go free
Space Shuttle Example.
The null hypothesis of NASA is that the space is not safe to launch. (in most judicial systems, the person is NOT guilty until proven otherwise).
Type 1 error = saying that it IS safe to launch when it’s not safe. error of commission. (killed 7 people)
Type 2 error = saying that it’s not safe to launch when it is safe.
Other examples: FDA trials before drugs go to market, checkpoints at airport post 9/11
Tradeoff - you can do things that avoid Type I errors, but you are correspondingly increasingly the probability of Type II errors.
