1989 Articles

Incentives, Information, and Organizational Design

Stiglitz, Joseph E.

Most economic activity -- and almost all production -- takes place within the context of organizations: Firms, family, and government. In each, there is a large element of collective decision-making. Our mixed attitudes towards this collective decision-making are reflected by a number of popular aphorisms and jokes: While we may claim that "two heads are better than one", it is also true that "too many cooks spoil the broth". There is the old joke about an elephant being a horse made by a committee.