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Disobedience and Authority*

  1. Anthony M. Marino
  1. University of Southern California
  2. University of Southern California
  3. Queen's University
  1. John G. Matsusaka
  1. University of Southern California
  2. University of Southern California
  3. Queen's University
  1. Ján Zábojník*
  1. University of Southern California
  2. University of Southern California
  3. Queen's University
  1. *Department of Economics, Queen's University, Dunning Hall, Room 319, Kingston, Ontario, Canada K7L3N6. Email: zabojnik{at}econ.queensu.ca

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.

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This Article

  1. J Law Econ Organ 26 (3): 427-459. doi: 10.1093/jleo/ewp005
  1. All Versions of this Article:
    1. ewp005v1
    2. 26/3/427 most recent

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