Organization, Loyalty and Efficiency

The problem of the coordination of the choices and behavior of different economic agents is one of the most crucial in economic analysis. This problem arises both within the market and within organizations. Within the market, price coordinates the free choices of the agents. The variation of the price permits the consistency of the independent choices of the economic agents. In particular, following Hayek (1945), the price vector represents the information tool which allows the market to reach equilibrium. Therefore, information is a product of the market rather than a premise of the exchange. On the contrary, according to Stiglitz (1987), the price mechanism does not necessarily bring the economic system towards equilibrium when the quality of the product rests on price. An analogous need for coordination also arises within bureaucratic organizations born to overcome the shortcomings of the market. Following the ”new institutional economics” approach, the organization arises as an instrument to reduce the excess of the transaction costs and to control individual opportxmism present within the market due to asymmetric information and uncertainty (Coase, 1937; Williamson, 1975, 1985).