A Limited Rationality Model of Interlocking Directorates.

Abstract

Conflicting models of interlocking directorates are examined, and a limited ratinality model is proposed as a more complete and accurate alternative. This model considers the costs, benefits, and limitations to optimal decision making concerning the creation of interlocking directorates from the viewpoints of (1) the participating directors, (2) the interlocking organizations, and (3) society. This framework is used to explain why interlocking directorates exist, to determine the net impact interlocks have on various constituencies, and to make predictions concerning their future use.