A Theory of Appeasement: Naïve Organization

Saha, Soumyarup and Banerjee, Swapnendu and Paul, Arindam (2026): A Theory of Appeasement: Naïve Organization.

Abstract

We explore the optimal choice of a low-ability principal while recruiting between high-ability and low-ability agents for a particular position in an organization. The organization is naïve in the sense that it fails to shut the door to malpractice possibilities in recruitment. The agents engage in a tournament of appeasing the principal in order to get favoured prior to the recruitment process. The principal being low-ability suffers from inferiority complex vis-à-vis the high-ability (identifies with the low-ability agent) and enjoys the appeasement of the low-ability agent more vis-à-vis the high-ability. We find conditions under which the low-ability will appease more compared to the high ability. We also explore conditions under which the principal will recruit the low-ability agent, thus jeopardizing the organizational welfare.

• Item Type: MPRA Paper
• Language: English
• Keywords: Appeasement, Recruitment, Hidden Action, High-ability, Low-ability
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts

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