The Importance of Legitimacy

Akerlof, Robert

Published by Oxford University Press on behalf of the World Bank

关键词: LEADERSHIP;    LEGITIMACY;    MORAL HAZARD MODEL;    BUREAUCRACY;    MERGERS;   

DOI  :  10.1093/wber/lhw009
RP-ID  :  140521

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Within organizations, there aretypically limits to leaders’ legitimacy. This articleexplores how organizations are structured in the face ofsuch constraints. The concept of legitimacy is formalized inthe context of a single-agent moral hazard model. Theprincipal can give the agent monetary incentives; inaddition, he can give the agent an order. The agent finds itcostly to disobey orders provided they are legitimate. Theauthors find that it may be optimal for the principal totake costly actions to bolster legitimacy. The authors arguethat many organizational phenomena can be understood asattempts to bolster legitimacy. Examples include: rejectionof overqualified workers, bureaucracy, merger decisions, andabove-market-clearing wages.