Foresight and Myopia in Organizational Membership

Abstract

This paper demonstrates the importance of foresight in organizational membership decisions. The analysis is directed toward union membership decisions, but the logic holds for other kinds of organizations which provide selective incentives on the basis of member seniority. Discussion proceeds along these lines. First, the importance of seniority and time is emphasized, and the literature is discussed in this light. Second, a formal model of the membership decision is developed. Membership is viewed as an investment which generates a stream of benefits and costs, like an investment in a capital asset. Important existence and comparative statics results are examined. Third, the implications of the benefit stream approach for membership loyalty during benefit interruptions are examined. The model leads to a number of hypotheses which have been verified empirically in other studies, as well as a set of conjectures for future study. A special case of uniform benefit growth is presented in order to demonstrate the methodology and results of the benefit stream model.