Daniel Ferreira is a Professor of Finance at Department of Finance in London School of Economics and Political Science.
Website: https://sites.google.com/view/danielferreira/home
Paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4746904
Abstract: An organization is autonomous if
it has the right or power of self-government. Self-government implies that
autonomous organizations cannot rely on outside parties for monitoring or
contract enforcement. We present a model of the optimal power allocation in
such an organization. The organization commits to a governance structure that
allocates managerial power to agents. Members with power ("managers")
can punish members without power ("subordinates"). This power is,
however, limited by the subordinates' right to exit the organization. There are
three main results. First, the goals of autonomy, decentralization, and
efficiency conflict with one another. We call this result the Organizational
Trilemma. Second, there is a Paradox of Power: an agent can be made worse off
by their own power. Third, optimal governance structures in autonomous
organizations are centralized and populist: the powerful party shows restraint
in early periods, only to abuse their power in later periods.
If you would like to
give a presentation in a future webinar, please contact our Senior Economist
Dr. Wen Chen (wen.chen@luohanacademy.com).
For other inquires, contact events@luohanacademy.com.