Questions: First AssignmentPage 1

Economics 457: Spring 2018

Questions for first reading assignments:

General questions to be thinking about:

  1. In fast-food chains, some decisions about standards are made centrally and others are left to individual outlet managers. Who typically makes which types of decisions? Why? Can you think successfully about the fast-food business by dividing the issues between coordination and motivation?
  1. Explain why corporations frequently reward salesmen on the basis of a combination of salary and commission rather than salary alone. What problems will this policy tend to generate? Would your answer depend on the organizational structure of the business? (Consider the following possibilities for an insurance company: (a) all corporate insurance agents work exclusively for the company; the average employment period of agents is 2 years. (b) the company contracts with “independent agents” who may also represent other companies; most independent agents are “career” agents.)
  1. Why is there tipping as a means of paying certain workers? Can we predict which types of jobs will involve tip as part of the payment for the job? Why is it considered “unethical” for students to tip professors who provide services to them, but it is socially expected that they tip restaurant servers? Why don’t we tip airline cabin attendants, but do tip the airline skycaps? Why is there no tipping in Japan?
  1. What are the incentive and disincentive effects of grading schemes in classes?

Questions on the readings “The Nature of Man” and “Self-Interest, Altruism, Incentives & Agency Theory.”

  1. Why is a manager’s view of human behavior important to his or her success as a manager?
  1. Does money motivate people? Only money? Should people be motivated by money?
  1. Is REMM a bad model? How can we tell? What criterion should be used for choosing a model of human behavior for use in management decisions?
  1. Is devotion to an altruistic cause inconsistent with REMM or the Political Model of human behavior?
  2. Do you think production line workers are clever at reducing the effects of rules they do not like? How about managers, children, politicians, CEOs?
  1. Why is the principle of substitution important in predicting human behavior?
  1. How does the word “need” influence the way in which decisions are made?
  1. Under the Psychological Model of human behavior, do people engage in substitution? How about under the Political Model? Under the Sociological Model?
  1. Under the Sociological Model, do people respond to incentives generated by rewards and punishments?
  1. How can one specify the phenomenon with which Maslow was struggling without denying the general principle of substitution?

The psychologist M. Scott Peck wrote a book entitled The Road Less Traveled (Simon & Schuster, 1978, 1998). This book was a best seller for many years. It is of interest because in the first section of the book, Peck posits an additional model of human behavior. Basically Peck develops a framework in which individuals’ desire to avoid pain and embarrassment leads to unproductive behaviors. Though not assigned for the class (at this time), students should think about the issue and refer to the book (through page 77) as needed.

  1. Does the avoidance of pain and/or embarrassment cause behavior that you know is “not rational”? Can you give examples from classroom situations?
  1. Can you think of an example from your own professional or personal life where Peck’s framework would have helped you to better understand and deal with your own behavior or the behavior of others?
  1. Is Peck’s theory applicable to organizational behavior? How? Can you think of an example?
  1. Based on Peck’s evidence, should we reject REMM as a model of human behavior? If not, how do we reconcile the behavior described by Peck with REMM?
  1. Why don’t people learn that defensive behaviors (physical and psychological pain avoidance) make them worse off?
  1. Does the desire to avoid pain and embarrassment (that often results in defensiveness) lead to behavior inconsistent with REMM?

Biologist Richard Dawkins has developed a theory of behavior that uses the gene as the “actor” that determines behavior. He uses this paradigm to explain the rationality of truly altruistic behavior. (see Dawkins, The Selfish Gene, Oxford University Press, 1990)

  1. Can genes be immortal? Why or why not? If so, how?
  1. Who is the “decision maker” in the REMM model? How would the REMM and other human behavior models change if the “decision maker” was “the gene”?