Opportunism

Last year, I had the opportunity to invest money in a company's stock. Due to a family member working inside of the company that gave me information on investing in the company, I knew that there was a highly likely chance of the stock going up rapidly in the near future. Ethical concerns arose because I believed I had information that the general public did not have. Because of this, I chose to not invest in the stock. Even though the stock did go up rapidly in the coming weeks, I still felt I made the right choice.

There are multiple reasons as to why I chose not to invest in the company. While I was unsure of the exact law, I believed that I would be somewhat involved in insider trading. As this is illegal, and being a law-abiding citizen is important to me as an American, so that influenced my decision. I also believed that this was unethical because I had information that the general public did not have and it would be wrong to make money with an unfair advantage. Another reason was that I wasn't entirely sure of the advice, and the possibility of losing money was also in my mind and influenced my decision.

Ultimately, my various reasons came to the same conclusion: making money with an unfair advantage is not only unethical, but highly illegal, and I came to the conclusion that I couldn't proceed with the investment. While the possibility of losing money was a very different reason than ethical issues, it still led me to the same decision.

Experience Within Organizations

My experience within an organization is working with the Illinois Department of Transportation over the summer as an intern. While working as an intern, I was assigned to supervise and audit projects that were contracted out to private contractors and subcontractors for state-funded work on state-owned roads. This was within the Bureau of Construction of IDOT. The structure within the Bureau of Construction was split into separate field offices outside of the headquarters. Each field office consisted of a Resident Engineer, who was in charge, and about 2 or 3 Civil Engineers. Each field office was in a separate area of District 1, which consisted of Cook County, Lake County, DuPage County, and some other smaller ones. Each Resident Engineer was assigned a project which was to be completed in a certain period of time, usually about 60 days and within 10 miles of the field office. Each project was first bid on by private contractors, with the lowest bid usually winning (bid is the amount it would cost them to complete the project). After the private contractors began work on the project, our job was to supervise the contractors by performing several measurements and blueprint reviews each day, making sure that the private contractor was doing exactly as laid out in the blueprint. Periodically throughout the project, we would also audit the time and materials used by the contractor to ensure that IDOT was being billed correctly by the contractor.

To the best of my knowledge, the entire Bureau of Construction is a transaction cost. The production costs are represented by the private contractors. Similar to a proctor of a test representing transaction costs, our job was to ensure that the private contractors remained honest and stuck to the blueprints. In a world without dishonesty, our job would be unnecessary. Therefore, the work we performed was a transaction cost of road construction.

Herbert Simon Bio

Herbert Simon, 1916-2001, was an American social scientist that performed research in many fields, including political science, economics, sociology, and psychology. Herbert Simon's contributions to the field of economics are very interested. He is most famous for his theories on bounded rationality. Interestingly, he preferred to call his theories "satisficing", combining the words "satisfy" and "suffice" to attempt to explain the reasoning behind the human mind's cognitive limits for processing information. A major part of his research was his theory that individuals do not attempt to maximize their benefits from particular situations because of the near-impossibility of doing so. He maintained that not only would it be incredibly difficult for an individual to obtain all the information needed to perform such a process, the human mind simply isn't capable to process all this information for every situation. This was important because it was able to effectively explain human's tendency to settle for products or services that were satisfactory while not necessarily maximizing benefits; for example, such as buying a car you felt was affordable in one day rather than waiting one week to properly compare different vehicles at different dealerships.
I was unaware of Herbert Simon's significance to the field of economics before I enrolled in this course, and have learned much about him since. Herbert Simon's research is important to the study of the economics of organizations because it helps to explain why managers of organizations don't always make choices that maximize their benefits and make choices that satisfy simple goals because it is easier.