Module description
What is the module about?
This module gives students a thorough introduction to the field of behavioural organisational economics. We will discuss seminal as well as current research papers in the field, featuring empirical studies as well as lab and field experiments. The ultimate aim of the module is to transfer research findings to real-world applications in organisations.
We will study employment relationships between workers and organisations and get to know key factors that shape them in a positive way. We will focus on the two concepts of motivation and selection.
When it comes to the question of how to motivate workers on their jobs, we will discuss desired as well as unexpected effects incentives can have and examine the interplay between incentives, on the one hand, and cultural and psychological factors on the other. Besides analysing financial incentives, we will consider “psychological” incentives, including workers’ intrinsic satisfaction of a job well done and perceptions that one is treated fairly.
When it comes to selection and hiring, we tackle the question of how to best match candidates to jobs. We will look at which types of workers are attracted by specific organisational cultures that, for instance, emphasise competition or, conversely, cooperation between workers. We will also find out more about how to detect discrimination in the hiring process – and discuss measures that can help to mitigate or even eliminate it.
Who should do this module?
This module is intended for students who are interested in studying the economics of organisations and who are keen on learning more about the field of behavioural economics. We will study how psychological and social factors shape individuals’ behaviour in organisations.
Throughout the module, we will use simple formal models to organise ideas and to derive testable hypotheses. Many of the empirical results we will study come from experiments, ranging from laboratory studies of basic human interactions to largescale field experiments where researchers have worked closely with organisation to test effects of HRM policies on employee performance. In the beginning of the module, we will therefore introduce some of the basics of the experimental methodology.
Students don’t have to be experts in econometrics to understand the empirical studies that we will be discussing. But having had a module in econometrics will deepen the appreciation of what these studies do. We will also run into a little game theory as students know it from microeconomics modules. And again, although students won’t need to be experts in game theory to understand the simple models in this module, their understanding will be enriched if they have a bit of background in this area.
Provisional Lecture Outline
Lecture 1: The principal-agent model
Lecture 2: Randomised controlled trials
Lecture 3: Pay for performance
Lecture 4: Some non-classical motivators
Lecture 5: Reciprocity at work Reading Week
Lecture 6: Relative performance incentives – pros and cons
Lecture 7: Team performance incentives – pros and cons
Lecture 8: Selection into team incentive schemes
Lecture 9: Employee selection – issues of discrimination
Lecture 10: Revision session
Assessment details
80% Examination
20% Presentation
Teaching pattern
Weekly Lecture
Weekly Tutorial
Suggested reading list
Key Textbooks
Most of the course is based on academic journal articles.
There are some weekly readings taken from the textbook:
Kuhn, Peter. Personnel Economics. Oxford University Press, 2018.
Background Reading
Camerer, Colin F., and Ulrike Malmendier, 2007. "Behavioral Organizational Economics." In Peter Diamond and Hannu Vartiainen, eds., Behavioral Economics and Its Applications. Princeton University Press. Pages 235-290.