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The (De)composition of Firms: Interdependent Preferences of Corporate Actors

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Abstract

This article discusses the limitations of the orthodox economic theory of the firm as a nexus of contracts. Various experimental studies have shown that the aggregation of individuals in groups changes behaviour and preferences systematically. This perspective has been formalised by models of interdependent preferences. Based on a prominent approach of interdependent preferences, intention-based preferences, two types of labour contracts, incentive contracts and bonus contracts are analysed. Results are compared with the predictions of the orthodox economic theory.

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Authors and Affiliations

  1. Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Straße 10, 53113, Bonn, Germany

    Andreas Nicklisch

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  1. Andreas Nicklisch
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Correspondence to Andreas Nicklisch.

Additional information

I gratefully acknowledge the helpful advice of C. Engel, M. Hellwig and C.C. von Weizsäcker.

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Nicklisch, A. The (De)composition of Firms: Interdependent Preferences of Corporate Actors. Eur Bus Org Law Rev 10, 291–305 (2009). https://doi.org/10.1017/S1566752909002912

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  • DOI: https://doi.org/10.1017/S1566752909002912

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