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Semester 2

Economics of Organisations (ECNM10101)

Subject

Economics

College

CAHSS

Credits

20

Normal Year Taken

3

Delivery Session Year

2023/2024

Pre-requisites

Visiting students must have completed the equivalent of at least 4 semester-long Economics courses at grade B or above for entry to this course. This MUST INCLUDE courses in: Intermediate Macroeconomics (with calculus); Intermediate Microeconomics (with calculus); Probability & Statistics; and Introductory Econometrics. If macroeconomics and microeconomics courses are not calculus-based, then, in addition, Calculus (or Mathematics for Economics) is required at grade B or above. Please see Additional Restrictions below.

Course Summary

This course studies the behaviour of firms and organisations by looking at their internal structure and the interactions among workers (e.g. the importance of social interactions between co-workers, the role of communication, etc.) and between different layers of the organisation, (e.g. the importance of managers and CEOs, the effect of good/bad management practices, etc.). The course also explores the main theories and reasons that explain that firms exists, the mechanisms that determine productivity and outcomes (e.g. the how incentives and imperfect information determine the performance of workers, the role of intrinsic motivation, etc.). The focus of the course is not only (private) firms but also organisations of different types, like NGOs, police forces or other government institutions. The course has a strong empirical component but it also leverages some models that rationalize and explain the observed behaviour of the individuals that compose the organisation. The combination of empirical evidence with theoretical models allows us to design policies that can improve the outcomes of the organisation by optimally aligning the incentives within it. Finally, it studies how the design of the structure of the organisation can lead to different performance (e.g. family firms, horizontal/decentralised vs. vertical firms, team vs. individual production, etc.). The focus of the course is not only (private) firms but also organisations of different types, like NGOs, police forces or other government institutions. The course has a strong empirical component but also leverage some models that rationalize and explain the observed behaviour of the individuals that compose the organisation. The combination of empirical evidence with theoretical models allows us to design policies that can improve the outcomes of the organisation by optimally aligning the incentives within it.

Course Description

The course starts by reviewing the different theories that explain the existence of firms/organisations. Given the strong empirical content of the course, we review the main econometric tools required to understand the applications and readings (Regression analysis, RCTs, Panel Methods, Difference-in-Differences, IV and Regression Discontinuity). Then, the course study a number of topics and applications that include: the role of managers and management practices, communication, social interactions and peer effects within firms, the role of incentives and imperfect information, intrinsic motivation, the hierarchical structure of the firm (horizontal vs. vertical firms, family firms), team vs. individual production. The course is taught through a series of lectures, problem sets and readings of empirical papers. The assessment of the course includes a group coursework, a group presentation and a written final exam.

Assessment Information

Written Exam 80%, Coursework 20%, Practical Exam 0%

Additional Restrictions

It is not suitable for students to take this course alongside Economics 2 (ECNM08006) OR Essentials of Econometrics (ECNM10052).

view the timetable and further details for this course