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On the Role of Incentives in Evolutionary Approaches to Organizational Design

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  • Stephan Leitner

Abstract

This paper introduces a model of a stylized organization that is comprised of several departments that autonomously allocate tasks. To do so, the departments either take short-sighted decisions that immediately maximize their utility or take long-sighted decisions that aim at minimizing the interdependencies between tasks. The organization guides the departments' behavior by either an individualistic, a balanced, or an altruistic linear incentive scheme. Even if tasks are perfectly decomposable, altruistic incentive schemes are preferred over individualistic incentive schemes since they substantially increase the organization's performance. Interestingly, if altruistic incentive schemes are effective, short-sighted decisions appear favorable since they do not only increase performance in the short run but also result in significantly higher performances in the long run.

Suggested Citation

  • Stephan Leitner, 2021. "On the Role of Incentives in Evolutionary Approaches to Organizational Design," Papers 2105.04514, arXiv.org, revised May 2021.
    • Handle: RePEc:arx:papers:2105.04514
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    References listed on IDEAS

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    Cited by:

    1. Dario Blanco-Fernandez & Stephan Leitner & Alexandra Rausch, 2022. "Interactions between the individual and the group level in organizations: The case of learning and autonomous group adaptation," Papers 2203.09162, arXiv.org.
    2. Dar'io Blanco-Fern'andez & Stephan Leitner & Alexandra Rausch, 2022. "Dynamic groups in complex task environments: To change or not to change a winning team?," Papers 2203.09157, arXiv.org.

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