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In complex companies, where local context is key to making effective decisions, it is unlikely that the company's owners will be the most effective operational decision-makers.
But since bonding mechanisms are expensive, the agents who do have necessary context are unlikely to be sufficiently aligned with the company's interests and therefore the resulting capture risk must be mitigated with strong monitoring practices and limited agent autonomy (Fama and Jensen, 1983). This is part of why traditional organizations are rigid, slow to adapt to changing circumstances, and often cannot handle high complexity scenarios.
DAOs can handle much higher complexity than traditional organizations. With smart contracts, bonding mechanisms like shared ownership and negative incentives are much cheaper to implement, which, in contrast to traditional organizations, lets DAOs give agents with the most context enough autonomy to efficiently turn that context into effective actions. 2 replies
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