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Full-Text Articles in Industrial Organization
The Optimal Design Of Fallible Organizations: Invariance Of Optimal Decision Criterion And Uniqueness Of Hierarchy And Polyarchy Structures, Winston T. H. Koh
The Optimal Design Of Fallible Organizations: Invariance Of Optimal Decision Criterion And Uniqueness Of Hierarchy And Polyarchy Structures, Winston T. H. Koh
Research Collection School Of Economics
We present a general framework to study the project selection problem in an organization of fallible decision-makers. We show that when the organizational size and the majority rule for project acceptance are optimized simultaneously, the optimal quality of decision-making, as determined by the decision criterion, is invariant, and depends only on the expertise of decision-makers. This result clarifies that the circumstances under which the decision-making quality varies with the organizational structure are situations where the organizational size or majority rule is restricted from reaching the optimal level. Moreover, in contrast to earlier findings in the literature that the hierarchy and …
Optimal Sequential Decision Architectures And The Robustness Of Hierarchies And Polyarchies, Winston T. H. Koh
Optimal Sequential Decision Architectures And The Robustness Of Hierarchies And Polyarchies, Winston T. H. Koh
Research Collection School Of Economics
This paper studies collective decision making in the context of a project selection model. We derive the optimal decision architecture in the presence of marginal decision costs, and investigate the circumstances under which the hierarchy and polyarchy emerge as optimal sequential architectures. Our analysis extends previous results on optimal organizational decision-making to a sequential setting, and further demonstrates the fragility of the hierarchy and polyarchy as optimal architectures.