Abhijit Ramalingam

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Why do firms exist? What is their function? What do managers do? What is the role, if any, of social motivation in the market? In this paper, we address these questions with a new theory of the firm which unites some major themes in management, principal-agent theory, and economic sociology. We show that while the market is a superior incentive mechanism,(More)
This paper shows that it is individually rational for agents in a firm to develop and exhibit status concerns. Workers are, by their choices of status concerns, able to transfer surplus from the the firm to themselves. As expected, relative concerns are shaped by the relative strengths and weaknesses of the workers in the firm. Surprisingly, a firm’s profit(More)
If workers have concerns for local status, it seems plausible that firms can increase their profits by exploiting the competitive nature of their employees. This paper shows, contrary to expectations, that firms may not be able to do that; in fact, firm profits are reduced by the workers’ choices of relative concerns. In doing so, this paper also offers an(More)
This paper shows that it is individually rational for agents in a firm to develop and exhibit status concerns. Workers are, by their choices of status concerns, able to transfer surplus from the the firm to themselves. Further, relative concerns are shaped by the relative strengths and weaknesses of the workers in the firm. Finally, and surprisingly, a(More)
I consider a simple linear principal-agent model with one principal and two agents and explore the rationality and efficiency of endogenous status concerns on the part of the agents. Following CasadesusMasanell (2004), I assume that status concerns have no real utility value and posit that status concerns are chosen to maximise only material utility. First,(More)
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