Unifying temporal and organizational scales in multiscale decision-making
AbstractIn enterprise systems, making decisions is a complex task for agents at all levels of the organizational hierarchy. To calculate an optimal course of action, an agent has to include uncertainties and the anticipated decisions of other agents, recognizing that they also engage in a stochastic, game-theoretic reasoning process. Furthermore, higher-level agents seek to align the interests of their subordinates by providing incentives. Incentive-giving and receiving agents need to include the effect of the incentive on their payoffs in the optimal strategy calculations. In this paper, we present a multiscale decision-making model that accounts for uncertainties and organizational interdependencies over time. Multiscale decision-making combines stochastic games with hierarchical Markov decision processes to model and solve multi-organizational-scale and multi-time-scale problems. This is the first model that unifies the organizational and temporal scales and can solve a 3-agent, 3-period problem. Solutions can be derived as analytic equations with low computational effort. We apply the model to a service enterprise challenge that illustrates the applicability and relevance of the model. This paper makes an important contribution to the foundation of multiscale decision theory and represents a key step towards solving the general X-agent, T-period problem.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Operational Research.
Volume (Year): 223 (2012)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/eor
Distributed decision-making; Game theory; Markov processes; Multi-agent systems; OR in service industries;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nie, Pu-yan & Chen, Li-hua & Fukushima, Masao, 2006. "Dynamic programming approach to discrete time dynamic feedback Stackelberg games with independent and dependent followers," European Journal of Operational Research, Elsevier, vol. 169(1), pages 310-328, February.
- Geanakoplos, John & Milgrom, Paul, 1991.
"A theory of hierarchies based on limited managerial attention,"
Journal of the Japanese and International Economies,
Elsevier, vol. 5(3), pages 205-225, September.
- John Geanakoplos & Paul R. Milgrom, 1988. "A Theory of Hierarchies Based on Limited Managerial Attention," Cowles Foundation Discussion Papers 775R, Cowles Foundation for Research in Economics, Yale University.
- Brânzei, R. & Fragnelli, V. & Tijs, S.H., 2002.
"Tree-connected peer group situations and peer group games,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-91321, Tilburg University.
- Brânzei, R. & Fragnelli, V. & Tijs, S.H., 2000. "Tree-connected Peer Group Situations and Peer Group Games," Discussion Paper 2000-117, Tilburg University, Center for Economic Research.
- Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 301-24, Fall.
- Christian Wernz & Andrew Henry, 2009. "Multi-Level Coordination and Decision-Making in Service Operations," Service Science, INFORMS, vol. 1(4), pages 270-283, December.
- Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
- Schneeweiss, Christoph, 2003. "Distributed decision making--a unified approach," European Journal of Operational Research, Elsevier, vol. 150(2), pages 237-252, October.
- Wernz, Christian & Deshmukh, Abhijit, 2010. "Multiscale decision-making: Bridging organizational scales in systems with distributed decision-makers," European Journal of Operational Research, Elsevier, vol. 202(3), pages 828-840, May.
- Ozdamar, Linet & Bozyel, M. Ali & Birbil, S. Ilker, 1998. "A hierarchical decision support system for production planning (with case study)," European Journal of Operational Research, Elsevier, vol. 104(3), pages 403-422, February.
- M. A. Pollatschek & B. Avi-Itzhak, 1969. "Algorithms for Stochastic Games with Geometrical Interpretation," Management Science, INFORMS, vol. 15(7), pages 399-415, March.
- Gfrerer, Helmut & Zapfel, Gunther, 1995. "Hierarchical model for production planning in the case of uncertain demand," European Journal of Operational Research, Elsevier, vol. 86(1), pages 142-161, October.
- Vetschera, Rudolf, 2000. "A multi-criteria agency model with incomplete preference information," European Journal of Operational Research, Elsevier, vol. 126(1), pages 152-165, October.
- Schneewei[beta], Christoph, 1995. "Hierarchical structures in organisations: A conceptual framework," European Journal of Operational Research, Elsevier, vol. 86(1), pages 4-31, October.
- Stadtler, Hartmut, 2005. "Supply chain management and advanced planning--basics, overview and challenges," European Journal of Operational Research, Elsevier, vol. 163(3), pages 575-588, June.
- Schneeweiss, Christoph & Zimmer, Kirstin, 2004. "Hierarchical coordination mechanisms within the supply chain," European Journal of Operational Research, Elsevier, vol. 153(3), pages 687-703, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.