Behavioural Organization Theory


Health Economics

  • This is an idea that often replaces profit-maximizing theory, namely that organizations are better modelled in terms of the preferences of influential individuals and groups, especially the managers, within them with the general expectation that 'profit' will be but one of the entities they prefer, and not always even one of the preferred entities. The expectation is that the less competition there is for the ownership of organizations and the greater the monopoly power of the organization, the more discretion there will be for the individuals in question to indulge their own preferences, e.g. for a 'quiet life' or palatial premises. Non-profit organizations dominate, of course, in health care, in which the absence of shareholders, whose effective interest in an organization can usually safely be assumed to be the profits it yields them, is the principal characteristic.