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Optimal information transmission in organizations: search and congestion

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Author Info

  • Àlex Arenas

    ()

  • Antonio Cabrales

    ()

  • Leon Danon

    ()

  • Albert Díaz-Guilera

    ()

  • Roger Guimerà

    ()

  • Fernando Vega-Redondo

    ()

Abstract

We propose a stylized model of a problem-solving organization whose internal communication structure is given by a fixed network. Problems arrive randomly anywhere in this network and must find their way to their respective “specialized solvers” by relying on local information alone. The organization handles multiple problems simultaneously. For this reason, the process may be subject to congestion. We provide a characterization of the threshold of collapse of the network and of the stock of floating problems (or average delay) that prevails below that threshold. We build upon this characterization to address a design problem: the determination of what kind of network architecture optimizes performance for any given problem arrival rate. We conclude that, for low arrival rates, the optimal network is very polarized (i.e. star-like or “centralized”), whereas it is largely homogenous (or “decentralized”) for high arrival rates. We also show that, if an auxiliary assumption holds, the transition between these two opposite structures is sharp and they are the only ones to ever qualify as optimal. Keywords: Networks, information transmission, search, organization design.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10058-008-0067-2
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Bibliographic Info

Article provided by Springer in its journal Review of Economic Design.

Volume (Year): 14 (2010)
Issue (Month): 1 (March)
Pages: 75-93

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Handle: RePEc:spr:reecde:v:14:y:2010:i:1:p:75-93

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Web page: http://link.springer.de/link/service/journals/10058/index.htm

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Related research

Keywords: Networks; Organizations; Design; Search; Congestion; D23; D83; L22;

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References

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  1. Alan Beggs, 2000. "Queues and Hierarchies," Economics Series Working Papers 34, University of Oxford, Department of Economics.
  2. Visser, Bauke, 2000. "Organizational communication structure and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 231-252, June.
  3. Mathias Dewatripont & Patrick Bolton, 1996. "The firm as a communication network," ULB Institutional Repository 2013/9597, ULB -- Universite Libre de Bruxelles.
  4. Raaj Kumar Sah & Joseph E. Stiglitz, 1987. "The Architecture of Economic Systems: Hierarchies and Polyarchies," NBER Working Papers 1334, National Bureau of Economic Research, Inc.
  5. Van Zandt, Timothy, 1999. "Real-Time Decentralized Information Processing as a Model of Organizations with Boundedly Rational Agents," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 633-58, July.
  6. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
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Citations

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Cited by:
  1. Zenou, Yves & König, Michael D. & Tessone, Claudio J., 0. "Nestedness in networks: A theoretical model and some applications," Theoretical Economics, Econometric Society.
  2. Michael D. König & Claudio J. Tessone & Yves Zenou, 2010. "From Assortative To Dissortative Networks: The Role Of Capacity Constraints," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 13(04), pages 483-499.
  3. Benjamin Golub & R. McAfee, 2011. "Firms, queues, and coffee breaks: a flow model of corporate activity with delays," Review of Economic Design, Springer, vol. 15(1), pages 59-89, March.
  4. Antoni Rubí-Barceló, 2008. "Scientific collaboration networks: how little differences can matter a lot," DEA Working Papers 30, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  5. M. Koenig & Claudio J. Tessone & Yves Zenou, . "A Dynamic Model of Network Formation with Strategic Interactions," Working Papers CCSS-09-006, ETH Zurich, Chair of Systems Design.
  6. Nils Roehl, 2013. "Two-Stage Allocation Rules," Working Papers 73, University of Paderborn, CIE Center for International Economics.
  7. Ambrus, Attila & Azevedo, Eduardo M. & Kamada, Yuichiro, 2013. "Hierarchical cheap talk," Theoretical Economics, Econometric Society, vol. 8(1), January.

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