AØKK08218U  Incentives and Organizations

Volume 2018/2019

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 structures and the allocation of tasks and responsibilities within an organization? How do coworker relationships, employees’ work morale, and the perceived fairness of one’s pay influence workplace behavior?

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 having successfully completed the course, students should be able to


  • understand central theoretical insights and state-of-the-art empirical research in organizational economics.

  • understand 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.

  • The course also equips the students with the necessary tools and skills to continue working on related topics in seminars or Master’s theses.

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.

BSc in Economics or similar
A sound knowledge of microeconomic theory as well as a sound understanding of econometric techniques from the BA in Economics or similar are required.

It is highly recommended that Microeconomics III has been followed prior to "Incentives and Organizations" or will be followed in parallel with the course.
The format of the course is a combination of lectures and individual student work. Every second week, there will be a lecture block at which core concepts, theories, and empirical results are presented. Every other week, there will be a session in which students work on their own (individually or in groups) with review questions of direct relevance for the syllabus and the exam.
2 hours lectures 1 to 2 times a week from week 36 to 50 (except week 42).

The overall schema for the Master can be seen at https:/​/​intranet.ku.dk/​economics_ma/​courses/​CourseCatalogue-E18/​Courseschema/​Pages/​default.aspx

Timetable and venue:
To see the time and location of lectures please press the link under "Se skema" (See schedule) at the right side of this page. E means Autumn.

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E18; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
at the computers of Copenhagen University.
The exam assignment is given in English and must be answered in English.
Exam registration requirements



Without aids


Marking scale
7-point grading scale
Censorship form
No external censorship
Exam period

The exam takes place at the exam venues of the university:

18 January 2019

The exact time and room of the exam will be informed in the Self-Service at KUnet


Exam information:

For enrolled students more information about examination, rules, exam schedule etc. is available at the intranet for  master students (UK) and master students (DK).



The reexam takes place at the exam venues of the university:

19 February 2019

The exact time and room of the exam will be informed in the Self-Service at KUnet


Reexam information:

If only a few students have registered for the written re-exam, the reexam might change to an oral exam including the date, time and place for the exam, which will be informed by the Examination Office.

For enrolled students more information about reexamination, rules, schedule,venue etc. is available at the intranet for  master students (UK) and master students (DK).


Criteria for exam assesment

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

To receive the top grade, 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.

  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 161
  • Exam
  • 3
  • Total
  • 206