Employment Contracts, Influence Activities, and Efficient Organization Design

  title={Employment Contracts, Influence Activities, and Efficient Organization Design},
  author={Paul R. Milgrom},
  journal={Journal of Political Economy},
  pages={42 - 60}
  • P. Milgrom
  • Published 13 May 1987
  • Business
  • Journal of Political Economy
When changing jobs is costly, efficient employment contracts usually fail to compensate workers for the effects of posthiring events and decisions. Then, when there are executives and managers with authority to make discretionary decisions, affected employees will be led to waste valuable time trying to influence their decisions. Efficient organization design counters this tendency by limiting the discretion of decisions makers, especially for those decisions that have large distributional… 

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