Paul Henri MOISSON will defend his thesis on Wednesday, September 4 at 4:00 pm, (Auditorium 3 & Online, building TSE)
Title: "Essays in Organizational Economics"
Supervisors: Jean TIROLE and Johannes HÖRNER
To attend the conference, please contact the secretariat Christelle Fotso Tatchum
Memberships are:
Jean TIROLE : Honorary Chairman TSE & IAST – Supervisor
Johannes HÖRNER : Senior Researcher (CNRS) Co-Supervisor
David AUSTEN-SMITH : Professor in Economics Kellogg School of Management Rapporteur
Mathias DEWATRIPONT : Professor in Economics, Solvay Brussels School of Economics & Management Rapporteur
Abstract
This thesis explores questions in organizational economics and industrial organization. The first essay studies meritocracy, asking how individuals behave in a society that re[1]wards "merit", despite not being all on the same starting line, and whether inequality in head starts makes meritocracy undesirable. The essay develops a model of career concerns in which agents publicly choose among several activities in which to exert effort, and differ along a privately observable "head start" that affects their performance. The agents’ audience values talent, effort and head start. Two contrasting effects arise: a displacement effect by which the "poor" (head start-wise) try to avoid a lower talent image and thus avoid the activity chosen by the "rich", and a distinction effect by which the rich try to reap a higher head-start image and thus avoid the activity chosen by the poor. While displacement drags the poor towards activities with lower incentives on effort, distinction pulls the rich towards activities with higher incentives. The essay emphasizes how the dominance of displacement or distinction can cause well-meaning policy interventions to backfire, and make meritocracy desirable or not. While the first essay asks how agents choose their activities and organizations, one may ask complementarily how incumbent members recruit new members.
The second and third essays, co-authored with Jean Tirole, study these questions in collegial environments when individuals care about quality and homophily. The second essay focuses on control concerns, taking candidacies as exogenous. It characterizes the two fundamental regimes: meritocracy (recruitment of the most talented) and entrenchment (recruitment of the in-groups to secure a party’s hold on future hires). It investigates policy interventions – such as affirmative action, quality assessment exercises, overruling of majority decisions – and their unintended consequences. The third essay focuses on attractivity concerns by endogenizing candidacies. It shows that to avoid depriving itself of its talent pool, an organization’s majority voluntarily engages in affirmative action to leverage the minority’s own homophily. This occurs when the organization, while currently unattractive to the minority, still retains enough quality and diversity to allow a turnaround. Small variations in the initial quality or diversity of the organization can lead to virtuous or vicious spirals. The organization’s quality and diversity can be nonmonotonic along a virtuous spiral, and such nonmonotonicities bear important policy implications.
The fourth essay, co-authored with Pierre Dubois and Jean Tirole, investigates two new determinants of the comparative (dis)advantage of cooperatives of users over for-profits. Users who join a cooperative enjoy a free-usage right, which provides the cooperative form with a competitive advantage unless the market is served by a single entity – what founding members gain as users they then lose as shareholders. However, enlisting users to form a cooperative leads to lower licensing prices in the future, and thus a low willingness to pay to become a member, jeopardizing the cooperative’s funding. This Coasian profit-reduction effect dominates when the market size is small and the intensity of competition in the licensing market high, making the cooperative form irrelevant, whereas the free-usage right effect dominates when the market size is large and the intensity of competition low, leading possibly to the cooperative’s blockaded monopoly and for-profits’ irrelevance.
Lastly, the fifth essay studies prosocial behaviors when their consequences are determined by market equilibria and government interventions. It investigates socially responsible investment, asking to what extent investors’ ethics drive technology investment, environmental outcomes and asset returns. The essay unveils the determinants of a "morality premium" and derives implications for welfare and public policy.
