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Organizations and their effectiveness-2016/Key concept definitions
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=== Mike === This is not a formal definition, but it is illustrative of how some economists think about power. In a situation in which there are two or more people with conflicting preferences over a decision to be made, a person has "all the power" if their preferred decision is made. Compromises can of course result in decisions that are not the preferred decision of any person involved, so in many situation, nobody has "all the power." (Though according to this definition, in any single-person decision problem, the decision-maker has "all the power.") A person has "more power" if the decision made is something they prefer to the decision that would be made if they had "less power." Sources of power in economics: (1) patience and risk tolerance in bargaining (these are the standard components of "bargaining power" in models of bargaining), (2) information (for a particularly clear illustration, see Aghion and Tirole (1997) on "real authority" in which a formal decision-maker makes my preferred decision if I am informed, she is not, and she prefers making my recommended decision to inaction or taking a stab in the dark. Models of delegation, going back to at least Simon (1951)--although I'm not sure others view his model as a model of delegation, are also relevant here.), (3) possession of legally granted control rights (see Grossman and Hart (1986) and Hart and Moore (1990) for a clean operationalization), (4) commitment power (this is akin to the "first-mover advantage," and it begs the question of where commitment power comes from), (5) rewards for past performance (see Li, Matouschek, and Powell (2016)).
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