Behavioral Economics and Nonrational Organizational Decision Making

My chapter focuses on behavioral economics, and some of its potential contributions to understanding behavior in organizations. First I define what makes economic analysis "behavioral," and then turn to two sorts of ideas about systematic departures from the conventional rationality assumptions in economics-experimental studies of game-playing behavior, and unorthodox assumptions about incentives and labor economics. (The game theory studies are a small part of a broad research program that will result. I think, in a very different sort of theory which is more descriptive than that of current theorizing.) The two strands are then loosely tied together in an alternative account of why LBO (leveraged buyout) restructuring of firms in the 1980s appears to have worked