Abstract
We propose a new mechanism to achieve coordination through voting, for which we discuss a number of real-life applications. Among them, the mechanism provides for a new theory for downsizing in organizations. A crisis may lead to a decrease in the willingness to cooperate in an organization, and therefore to a bad equilibrium. A consensual downsizing episode may signal credibly that survivors are willing to cooperate, and thus, it may be optimal and efficiency-enhancing (for the individuals remaining in the organization), as the empirical evidence suggests. A variation of the same mechanism leads to "efficient" upsizing. © 2007 by the European Economic Association.
Original language | English |
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Pages (from-to) | 1016-1042 |
Journal | Journal of the European Economic Association |
Volume | 5 |
DOIs | |
Publication status | Published - 1 Sep 2007 |