Blockchain: the Birth of Decentralized Governance

Benito Arruñada (Pompeu Fabra University and Barcelona GSE)
Luis Garicano (IE Business School, London School of Economics and)

Abstract : By allowing networks to split, decentralized blockchain platforms protect members against hold up, but hinder coordination, given that adaptation decisions are ultimately decentralized. The current solutions to improve coordination, based on “premining” cryptocoins, taxing members and incentivizing developers, are insufficient. For blockchain to fulfill its promise and outcompete centralized firms, it needs to develop new forms of “soft” decentralized governance (anarchic, aristocratic, democratic, and autocratic) that allow networks to avoid bad equilibria.

Delegation to a Group

Sebastian Fehrler (University of Konstanz)
Moritz Janas (University of Konstanz)

Abstract : We study delegation to a group of career-concerned experts, who can acquire information of different, type-dependent accuracy. The alternative to delegation - consulting the experts individually - induces more acquisitions of costly information. However, the acquired information is better aggregated under delegation. Which of the two effects dominates, depends on the cost of information. We characterize this trade-off theoretically and test our model's predictions in an experiment. While most of them are confirmed, we also find that principals do not rely on groups as often as predicted. This result even holds when the group merely takes the role of an advisory committee and the principal keeps the decision power.

An Academic Question: on the Role and Consequences of University Governance

Scott E. Masten (University of Michigan)

Abstract : Critics of American universities disparage the prevailing system of shared governance, in which boards, administrators, and faculty participate in institutional decision making, as a primary obstacle to solving — if not the ultimate cause of — the many problems confronting higher education. The extent to which bad governance is to blame for poor performance raises the question of how we ended up with our current system and why it has persisted: If superior arrangements exist, why were they not adopted? This paper associates the emergence and persistence of shared governance in universities with commitment problems created by the introduction and diffusion of research as major academic activity, thereby adding a temporal dimension to what were previously relatively discrete transactions. The paper uses a panel of 528 American colleges and universities to characterize the equilibrium relationship between research and decision-making authority and examine the performance implications of deviations from the equilibrium pattern.