December 2004

IZA DP No. 1423: On the Notion of Responsibility in Organizations

published in: Journal of Law, Economics, and Organization, 2006, 22(2), 523-547

We derive a natural definition of responsibility in a formal model where employees care for their career prospects: A superior holds a subordinate responsible for a task, when she announces her beliefs that this subordinate contributes most to this task. We show, that those announced beliefs lead to a self fulfilling prophecy as the reputation of the responsible subordinate then is affected by the outcome of the task and he therefore has strong incentives to contribute to its success. There are equilibria where either a single agent or no agent is responsible for a task but joint responsibility never arises. Several extensions are discussed.