Virtual Bargaining: A Microfoundation for Coordination and Organizational Design

How are workers able to coordinate their actions in a highly complex, open-ended, and continually changing environment? The classical answer in the organizational literature is: through communication and planning/programming. However, there are many organizational settings in which these mechanisms provide insufficient coordination. For example, workers may lack incentives to communicate about their actions, communication itself is inherently ambiguous and incomplete, and a dynamic environment may prevent organizational designers from planning/programming activities in sufficient detail.

To address this question, we develop an account of collaborative behavior based on virtual bargaining: a cognitive theory suggesting that individuals often act as if they had been able to bargain about what to do. The virtual-bargaining account differs from, and complements, alternative accounts of collaborative behavior, such as implicit contracts, altruistic preferences, reputation, social norms and corporate culture. We outline implications of the virtual-bargaining account for team production and organizational design.

Hossam will report on an interdisciplinary research project with Nick Chater (psychologist) and Tigran Melkonyan (economist), both at the University of Warwick.

Hossam Zeitoun is an assistant professor of strategy at Warwick Business School at the University of Warwick. He received his Ph.D. from the Department of Business Administration at the University of Zurich. His current research interests include behavioral science, corporate governance, and organizational design.