Disobedience and Authority

Authors: Marino, Anthony M.; Matsusaka, John G.; Zbojnk, Jn

Source: Journal of Law, Economics, and Organization, Volume 26, Number 3, 7 December 2010 , pp. 427-459(33)

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Abstract:

This article presents a theory of the allocation of authority in an organization in which centralization is limited by the agent's ability to disobey the principal. We extend the concept of real authority by observing that not only does the principal have to be informed to give an order but also the worker must be willing to follow the order. We show that workers are given more authority when they are costly to replace or do not mind looking for another job, even if they have no better information than the principal. The allocation of authority thus depends on external market conditions as well as the information and agency problems emphasized in the literature. We explore the implications of this insight for hiring policies and managerial styles.

Document Type: Research article

DOI: http://dx.doi.org/10.1093/jleo/ewp005

Publication date: 2010-12-07

More about this publication?

The Journal of Law, Economics, and Organization is an interdisciplinary exercise. It seeks to promote an understanding of many complex phenomena by examining such matters from a combined law, economics, and organization perspective (or a two-way combination thereof). In this connection, we use the term organization broadly - to include scholarship drawing on political science, psychology and sociology, among other fields. It also holds the study of institutions - especially economic, legal, and political institutions - to be specifically important and greatly in need of careful analytic study.