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Corporate Downsizing to Rebuild Team Spirit: How Costly Voting Can Foster Cooperation

Author

Listed:
  • Antonio Cabrales
  • Antoni Calvó-Armengol

Abstract

We propose a new mechanism to achieve coordination through voting, for which we discuss a number of real-life applications. Among them, the mechanism provides for a new theory for downsizing in organizations. A crisis may lead to a decrease in the willingness to cooperate in an organization, and therefore to a bad equilibrium. A consensual downsizing episode may signal credibly that survivors are willing to cooperate, and thus, it may be optimal and efficiency-enhancing (for the individuals remaining in the organization), as the empirical evidence suggests. A variation of the same mechanism leads to "efficient" upsizing. (JEL: C70, D70, M50) (c) 2007 by the European Economic Association.

Suggested Citation

  • Antonio Cabrales & Antoni Calvó-Armengol, 2007. "Corporate Downsizing to Rebuild Team Spirit: How Costly Voting Can Foster Cooperation," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 1016-1042, September.
    • Handle: RePEc:tpr:jeurec:v:5:y:2007:i:5:p:1016-1042
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    Cited by:

    1. Doh‐Shin Jeon & Domenico Menicucci, 2011. "Interconnection among academic journal websites: multilateral versus bilateral interconnection," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 363-386, June.
    2. Martin Ratzmann & Robin Pesch & Ricarda Bouncken & Carla Martínez Climent, 2018. "The Price of Team Spirit for Sensemaking Through Task Discourse in Innovation Teams," Group Decision and Negotiation, Springer, vol. 27(3), pages 321-341, June.

    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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