A Behavioral Economics Model of Knowledge Management
Stuart School of Business research presentation by: Associate Professor of Finance Ricky Cooper
A Behavioral Economics Model of Knowledge Management
- Associate Professor of Finance Ricky Cooper (presenter)
- Assistant Professor of Finance Seung Youn Cha
- James B. Finkl Endowed Professor, Associate Professor of Finance Benjamin Van Vliet
Abstract:
This paper develops a mathematical model of knowledge management in multi-level organizations. Drawing from behavioral economics, organizational theory, and knowledge management, we construct a formal framework in which both optimizing and satisficing behaviors determine the use and value of information. We demonstrate that proper transfer pricing and risk-adjusted evaluation can align incentives between hierarchical decision-makers—referred to as “supremal” and “infimal” agents—thus minimizing conflicts and enhancing organizational performance. In both normal and non-normal settings, we explore conditions under which satisficing behavior yields optimal or suboptimal outcomes. The model offers a prescriptive foundation for designing knowledge management strategies that promote alignment, efficiency, and resilience in complex firms.
All Illinois Tech faculty, students, and staff are invited to attend.
The Friday Research Presentations series showcases ongoing academic research projects conducted by Stuart School of Business faculty and students, as well as guest presentations by Illinois Tech colleagues, business professionals, and faculty from other leading business schools.