Optimal information transmission in organizations: search and congestion
AbstractWe 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 âspecialized solversâ 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 âcentralizedâ), whereas it is largely homogenous (or âdecentralizedâ) 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.
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Bibliographic InfoArticle provided by Springer in its journal Review of Economic Design.
Volume (Year): 14 (2010)
Issue (Month): 1 (March)
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Web page: http://link.springer.de/link/service/journals/10058/index.htm
Other versions of this item:
- Antonio Cabrales & Àlex Arenas & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega-Redondo, 2004. "Optimal Information Transmission in Organizations: Search and Congestion," Working Papers 2004.77, Fondazione Eni Enrico Mattei.
- Àlex Arenas & Antonio Cabrales & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega, 2003. "Optimal information transmission in organizations: Search and congestion," Economics Working Papers 698, Department of Economics and Business, Universitat Pompeu Fabra.
- Álex Arenas & Antonio Cabrales & Leon Danon & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega-Redondo, 2003. "Optimal Information Transmission in Organizations: Search and Congestion," Working Papers 64, Barcelona Graduate School of Economics.
- D20 - Microeconomics - - Production and Organizations - - - General
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
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