AØKK08218U Incentives and Organizations
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 and incentive structures, the allocation of tasks or responsibilities within an organization? How do coworker relationships, employees’ work morale, and the perceived fairness of one’s pay influence workplace behavior? How does the organization of public institutions affect their efficiency and the implementation of public policy?
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.
After completing the course the student is expected to be able to:
- Account for central theoretical insights and state-of-the-art empirical research in organizational economics.
- Account for 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.
Manage and implement the learned tools and accuired knowledge to continue working on related topics in seminars, Master courses 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.
A sound knowledge of microeconomic theory as at the BA in Economics or similar is required. It is highly recommended and that Microeconomics III has been followed prior to "Incentives and Organizations" or will be followed in parallel with the course.
In case of a pandemic like Corona the teaching in this course may be changed to be taught either fully or partly online. For further information, see the course room on Absalon.
2 hours lectures 1 to 2 times a week from week 6 to 20 (except holidays).
The overall schema for the Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"
Timetable and venue:
To see the time and location of lectures please press the link under "Timetable"/"Se skema" at the right side of this page. F means Spring.
You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F21; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring – Weeks 4-30”
Press: “ View Timetable”
The lecturer will give oral and written feedback during the exercise sessions on the students individual/group work.
For gæste- og enkelfagsstuderende: Tilmelding via Uddannelse i Økonomi.
- 7,5 ECTS
- Type of assessment
- Written examination, 3 hours under invigilationin the exam venues of the university.
The exam assignment is given in English and must be answered in English.
In the event that this summer's exams have to be conducted as online exams due to COVID-19, the exam form will be a 3 H take-home exam with aids. The reexam will be the same as the rescheduled ordinary exam, but possibly online orally if only few students register.
- Exam registration requirements
To qualify for the exam the student must no later than the given deadline during the course
- hand in and have approved two mandatory assignments in form of student presentations.
- Without aids
for the written exam.
In case of an oral reexam, please go to the section "Reexam" for further information about allowed aids.
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
- Exam period
The regular exam takes place:
17 June 2021
The exact time and room will be available in the Digital Exam from the middle of the semester.
In special cases, the exam date can be changed to another time and day. In case of COVID-19 restrictions, please refer to the "Type of assessment" section.
The written reexam takes place:
26 August 2021
NOTE: If only few students register for the written re-exam, the re-exam might change to a 20 minutes oral examination without preparation time.
No aids allowed during the examination.
If changed to an oral re-exam, the exam date, time and place might change as well. The Examination's Office then informs the students by KU e-mail. In case of COVID-19 restrictions, please refer to the "Type of assessment" section.
Info is available in Digital Exam early August.
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.