AØKK08455U Summer School 2026/2027: Economics of Organizations

Volume 2026/2027
Education

 

MSc programme in Economics – elective course

 

The course is open to:

  • Exchange and Guest students from abroad
  • Credit students from Danish Universities
  • Open University students
Content

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.

Learning Outcome

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

 

Knowledge:

  • Account for central theoretical insights and state-of-the-art empirical research in organizational, labor, and behavioral economics, with a particular focus on incentives, behavior, and matching in the workplace.
  • Explain key economic and behavioral concepts—such as incentive provision, moral hazard, intrinsic motivation, reference dependence, and time preferences—and how they generate systematic deviations from predictions of standard models.
  • Describe how economic models and causal empirical methods, including experimental and quasi-experimental approaches, are used to study behavior and outcomes within firms and labor markets.

 

Skills:

  • Interpret and critically assess theoretical and empirical studies in organizational and labor economics, with particular attention to identification strategies, behavioral mechanisms, and external validity.
  • Analyze and contextualize empirical findings on workplace behavior, incentives, and hiring, and identify limitations and open questions in the existing literature.

 

Competencies:

  • Apply economic theory and empirical reasoning developed in the course to analyze real-world organizational and labor-market problems, including incentive design, personnel policies, and recruitment decisions.
  • Use insights from labor and behavioral economics to evaluate or design organizational practices and policy interventions, including in settings not explicitly covered in the course.

The course is based on lecture notes and original research papers, all of which form part of the mandatory readings. A detailed syllabus with the full list of required readings will be provided at the beginning of the course. The following readings give an overview to many of the topics discussed throughout the course:

  • Gibbons, R. and J. Roberts (2013): “Economic theories of incentives in organizations. In Gibbons and Roberts (eds): Handbook of Organizational Economics, Princeton University Press.
  • Kuhn, P. (2018): “Personnel Economics”, Oxford University Press
  • Oyer, P. and S. Schaefer (2011): Personnel economics: Hiring and incentives. Handbook of Labor Economics. Vol. 4. Elsevier, 2011. 1769-1823.
A sound knowledge of microeconomic theory and econometric techniques from the BA in Economics or similar are required.
The course consists of lectures and mandatory student group work. Lectures introduce core concepts, theoretical frameworks, and key empirical findings. The group work component comprises three short applied projects: a referee report on a research paper, an organizational case study, and a research proposal.
  • Category
  • Hours
  • Lectures
  • 31
  • Class Instruction
  • 12
  • Preparation
  • 161
  • Exam
  • 2
  • Total
  • 206
Oral
Collective
Continuous feedback during the course of the semester
Credit
7,5 ECTS
Type of assessment
On-site written exam, 2 hours under invigilation
Examination prerequisites

To qualify for the exam the student must no later than the given deadline during the course:

  • 3 out of the 3 assignments must be approved for the student to participate in the exam.

The mandatory assignments consist of a referee report on a research paper, an organizational case study, and a research proposal developed during the group work sessions.
 

  • Active participation in course activities is expected. Students should attend at least 75% of classes. In case of illness or other documented reasons for absence, students are asked to inform the course coordinator and will be offered alternative arrangements to meet the participation requirement.

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

Exam information:

The examination date can be found in the exam schedule  here

More information is available in Digital Exam from the middle of the semester. 

More information about examination, rules, aids etc. is available at Master students (UK) and Master students (DK).

Re-exam

Same as the ordinary exam. 

  • To qualify for the exam the student must no later than the given deadline during the course:

  • 3 out of the 3 assignments must be approved for the student to participate in the exam. The mandatory assignments consist of a referee report on a research paper, an organizational case study, and a research proposal developed during the group work sessions.

  • Active participation in course activities is expected. Students should attend at least 75% of classes. In case of illness or other documented reasons for absence, students are asked to inform the course coordinator and will be offered alternative arrangements to meet the participation requirement.

Reexam info:

The reexamination date/period can be found in the reexam schedule  here

More information in Digital Exam in February. In special cases decided by the Department, the re-sit can change to another day and/or time than announced.

More info: Master(UK) and Master (DK).

Criteria for exam assesment

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.