Incentives and Organizations

Course content

Why do firms and other types of organizations exist? Which factors determine whether they succeed in achieving efficient levels of cooperation and coordination amongst their members?


How does individual behavior and organizational performance depend on compensation and incentive structures, the allocation of tasks or responsibilities within an organization? How do coworker relationships, employees’ work morale, and the perceived fairness of one’s pay influence workplace behavior? How does the organization of public institutions affect their efficiency and the implementation of public policy?


During the past decades, research in economics has made great progress in answering such questions by opening the “black box” of what happens within firms and other organizations. In this course, students will be introduced to the key theoretical concepts and empirical approaches that help understand the existence, design, and performance of organizations. The main part of the course will focus on the question how economic methods can be used to understand the relationship between incentives, organizational structure, and the performance of organizations. In particular, we will discuss (i) how incentives shape individual motivation and behavior, and (ii) how incentives as well as other organizational features (e.g., hierarchies, teams, authority, and delegation) affect collective behavior and organizational performance.

Learning outcome

After completing the course the student is expected to be able to:



  • Account for central theoretical insights and state-of-the-art empirical research in organizational economics.
  • Account for how economic theory, “insider econometrics”, lab and field experiments, and other complementary empirical methods can be used to address applied microeconomic questions.



  • Interpret and critically assess theoretical and empirical studies on incentive provision and behavior in organizations.

  • Put the results of these studies into perspective and identify limitations of the existing body of knowledge.



  • Apply the acquired knowledge and skills to practical questions related to incentive provision in organizations.

  • Manage and implement the learned tools and accuired knowledge to continue working on related topics in seminars, Master courses or Master’s theses.

The course will be based on a combination of lectures and student presentations. In order to take the exam, students have to sign up and prepare for at least two presentations. During the weekly lectures core concepts, theories, and empirical results will be discussed. Lectures are accompanied by exercise session, in which students work on their own (individually or in groups) and review questions and/or research papers of direct relevance for the syllabus and the exam.

Restrictions due to pandemic crisis:
The teaching in this course may be changed to be taught either fully or partly online due to a pandemic crisis like COVID-19. In case of changes and further information, please read the study messages in KUnet or the announcements in the course room on Absalon (for enrolled students).

The course will be based on lecture notes, research papers, and survey articles. Lecture notes are part of the mandatory readings. A detailed syllabus with required readings will be provided in the beginning of the course.

The following handbook chapters give an overview of research results in the field and provide an introduction of the theoretical concepts and main empirical approaches that will be used in class:

  • Gibbons, R. and J. Roberts (2013): “Economic Theories of Incentives in Organizations”, In Gibbons and Roberts (eds): Handbook of Organizational Economics, Princeton University Press.
  • Ichinowski, C. and K. Shaw (2013): “Insider Econometrics”. In Gibbons and Roberts (eds): Handbook of Organizational Economics, Princeton University Press.
  • Kuhn, P. and G. Charness (2011): “Lab Labor: What Can Labor Economists Learn from the Lab?”. In Ashenfelter and Card (eds): Handbook of Labor Economics, Volume 4 Part A. Amsterdam: North-Holland.
  • List, J. and I. Rasul (2011): “Field Experiments in Labor Economics”. In Ashenfelter and Card (eds): Handbook of Labor Economics, Volume 4 Part A. Amsterdam: North-Holland.

A sound understanding of econometric techniques are required from courses as Econometrics I at the Bachelor programme in Economics, University of Copenhagen.

It is highly recommended that Microeconomics III has been followed prior to "Incentives and Organizations" or will be followed in parallel as a sound knowledge of microeconomic theory is required.

3 hours lectures a week from week 6 to 17.
From week 17 there will be some individual guidance for writing the project.

The overall schema for the Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"

Timetable and venue:
To see the time and location of lectures please press the link under "Timetable"/​"Se skema" at the right side of this page. F means Spring.

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F22; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring – Weeks 4-30”
Press: “ View Timetable”

Please be aware:
- The schedule of the lectures can be changed without the participants´ acceptance. If this happens you can see the new schedule in your personal timetable at KUnet, in the app myUCPH and through the links in the right side and the link above.
- It is the students´s own responsibility continuously throughout the study to stay informed about their study, their teaching, their schedule, their exams etc. through the curriculum of the study programme, the study pages at KUnet, student messages, the course description, the Digital Exam portal, Absalon, the personal schema at KUnet and myUCPH app etc.



The lecturer will give oral and written feedback during the exercise sessions on the students individual/group work.

7,5 ECTS
Type of assessment
Written assignment, 4 weeks
The exam is a project drawing on relevant academic literature and research methods.

Please be aware that:
• The project can be written individually or in groups of two students.
• The writing process of the project begins with handing in a project description, that must be approved. Thereafter the students write the project paper.
• The students are allowed to discuss the project orally with other students at the course.
• The project description and the project paper must be written in English.
All aids allowed

for the project paper.


Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam.
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.


In order to obtain the top grade “12”, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.


In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of  the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 33
  • Preparation
  • 133
  • Project work
  • 40
  • English
  • 206


Course number
7,5 ECTS
Programme level
Full Degree Master

1 semester

- Go to 'Signup' for
information about registration and enrollment.

Information about admission and tuition fee: Master and Exchange Programme, credit students and guest students (Open University)

and venue:
- For teaching: Go to 'Remarks'.
- For exam and re-sits: Go to 'Exam'.
Department of Economics, Study Council
Contracting department
  • Department of Economics
Contracting faculty
  • Faculty of Social Sciences
Course Coordinator
  • Robert Mahlstedt   (16-5673666976783251656c7077786968784469677372326f7932686f)

See 'Course Coordinators'

Please read "Remarks" regarding the schedule of the teaching.

Saved on the 12-11-2021

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