Summer School 2026/2027: Economics of Organizations

This course studies the relationship between workers and firms and examines how organizations motivate, select, and manage employees.

Combining empirical evidence with economic theory of behavior, incentives and matching, the course addresses core questions in organizational, behavioral and labor economics: How should pay be structured to induce effort? When do incentives improve efficiency—and when can they backfire? How do behavioral factors such as intrinsic motivation, loss aversion, and bounded rationality affect workplace outcomes? And how do firms attract, select, and retain the right workers?

The course provides students with analytical tools to understand and evaluate compensation schemes, management practices, and hiring decisions from an economics perspective. Empirically, the course places a strong emphasis on experimental methods (laboratory and field experiments) and modern quasi-experimental designs, and combines economic models with causal evidence to study organizational behavior and individual decision-making in labor markets.

Part 1: Pay-for-Performance and Incentives within the Firm
The first part develops the principal–agent framework and analyzes how firms design compensation schemes to motivate effort. Topics include pay-for-performance, tournaments, multitasking and incentive distortions, and dynamic incentive problems such as career concerns and long-term contracts.

Part 2: Behavioral Motivators at the Workplace
The second part extends the standard framework by incorporating behavioral motives and cognitive constraints central to behavioral economics. We study time preferences, reference-dependent preferences, fairness concerns, intrinsic motivation, and examine how bounded rationality, peer effects, and team interactions influence effort, cooperation, and workplace outcomes.

Part 3: Matching Workers and Firms
The final part focuses on how workers and firms find and select each other. Topics include search and sorting, worker beliefs, recruitment and hiring decisions, and the role of discrimination and managerial biases in shaping organizational and labor-market outcomes.

The course is relevant for students interested in careers in organizations, including management, human resources, and organizational design, as well as for those planning to pursue an academic career in labor and behavioral economics.