Author Archive

Choice Architecture

| Steve Phelan |

Interesting article by Thaler and Sunstein in the LA Times on “choice architecture” and the concept of “libertarian paternalism”:

the organization of the context in which people make decisions. Choice architects are everywhere. If you design the ballot that voters use to choose candidates, you are a choice architect. If you are a doctor and must describe the alternative treatments available to a patient, you are a choice architect. If you design the form that new employees fill out to enroll in the company healthcare plan, you are a choice architect. If you are a parent, describing possible educational options to your son or daughter, you are a choice architect. If you are a salesperson, you are a choice architect (but you already knew that).


The libertarian aspect of the approach lies in the straightforward insistence that, in general, people should be free to do what they like. They should be permitted to opt out of arrangements they dislike, and even make a mess of their lives if they want to. The paternalistic aspect acknowledges that it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier and better.

Hmmm….is this freedom (of choice)? How would we build a practice of choice architecture?

3 April 2008 at 1:21 pm 2 comments

Riding Off Into the Sunset. . . .

| Steve Phelan |

Dear colleagues, this post represents my 22nd and final post as a guest blogger on O&M. Over the last four months I have learned a lot about blogs and successful blogging. For instance, the average post on O&M gets seen/read by about 70 people in the first 48 hours. Of these, perhaps only 5% will comment on a post. But blog posts have an incredibly “long tail”. The top posts on O&M average 3,000 or more views, with the top post over 7,000 views (see physics envy if you wish to add to the count). As a result of this long tail of posts, O&M receives about 1,000 hits per day! (more…)

27 March 2008 at 5:20 pm 6 comments

Fed Intervention Policy

| Steve Phelan |

Greg Mankiw reports that Myron Scholes has a novel idea to fix the credit crisis – rather than simply guaranteeing to underwrite asset losses (as they have with the JP Morgan/Bear Stearns ) Scholes proposes that the Fed takes senior equity and debt positions in a distressed bank thereby improving the capital adequacy ratio, and thus preventing a credit freeze which would damage the real economy. I like it – what do YOU think?

17 March 2008 at 4:44 am 2 comments

Debt Bites Back

| Steve Phelan |

A nice cartoon presentation of the debt crisis by the Wasington Post that you might want to use in your classes.

Two questions:

1) Is the story essentially correct or is it overly damning?

2) What are the organizational implications of this story – for institution and policy building?

We can only assume that all sorts of “corrective” measures will be planned and taken in the immediate future. I believe we should be getting involved in the debate by honing our theoretical position. We are watching economic history in the making.

17 March 2008 at 3:57 am Leave a comment

New NSF Solicitation

| Steve Phelan |

This call might be of interest to organizational economists:

From Jack M at the NSF:

NSF issued a new solicitation on Virtual Organizations as Sociotechnical Systems yesterday. Proposals are due 2 June.

Further information and a link to the solicitation itself can be found at:

This is a wonderful opportunity for US-based social scientists working on topics pertinent to virtual organizations, broadly construed. A synopsis and list of some potential topics is provided below. (more…)

8 March 2008 at 5:51 pm 1 comment

More on Blind Freddy

| Steve Phelan |

Apologies to everyone for my lengthy absence. Since January 1, I have been working in a new administrative role in the College of Business at UNLV {shock, horror}. (Details can follow after a formal announcement is made).

Further to my argument several months ago that “blind freddy” could have seen the mortgage problems, here is a nice insider view from Calculated Risk:

But a whole lot of these loans that are failing right now were originated as 100% CLTV stated-income loans, because the guidelines agreed to by the issuer allowed that. I am scratching my head over the logic here: I spent most of the early years of this decade, just as a for instance, blowing my blood pressure to danger levels every time I looked at the underwriting guidelines published by ALS, the correspondent lending division of Lehman. ALS was a leader in the 100% stated income Alt-A junk. And I kept having to look at them because my own Account Executives keep shoving them under my nose and demanding to know how come we can’t do that if ALS does it. I’d try something like “because we’re not that stupid,” and what I’d get is this: “But if ALS can sell those loans, so can we. All we gotta do is rep and warrant that they meet guidelines that Wall Street is dumb enough to publish.” Every lender in the boom who sold to the street wrote loans it knew were absurd, but in fact they had been given absurd guidelines to write to. What on earth good did it do to have those originators represent and warrant that they followed underwriting guidelines to the letter, when those guidelines allowed stated income 100% financing on a toxic ARM with a prepayment penalty?

The argument is that mortgage originators were not so much committing massive fraud but rather that banks were following lax guidelines that those on ‘the Street’ did not view as problematic (or perhaps that the ultimate investor did not view as problematic).

26 February 2008 at 4:53 am 1 comment

Law of Unintended Consequences

| Steve Phelan |

Nice post by Alex Tabarrok on the law of unintended consequences. He concludes by saying:

Does the law of unintended consequences mean that the government should never try to regulate complex systems? No, of course not, but it does mean that regulators should be humble (no trying to remake man and society) and the hurdle for regulation should be high.

24 January 2008 at 11:38 am Leave a comment

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Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).