Speed and Quality of Collective Decision-Making II: Incentives for Information Provision
AbstractThis Paper provides a game theoretic extension of Radner's (1993) model of hierarchical information aggregation. It studies the role of the hierarchy design for the speed and quality of a collective decision process. The hierarchy is described as a programmed network of agents. The programme describes how information is processed within the network. The network of P identical managers has to aggregate information in the form of a set of n data items in order to make an informed decision. Each manager benefits from reaching an accurate decision but suffers from an individual cost of effort, which has to be provided in order to understand the information contained in a data item properly. We find that decentralized information processing increases incentives for information provision. There may be boundaries on the appropriate extend of decentralization, however. We also compare three different hierarchy designs: two balanced hierarchies and the fastest (skip-level) hierarchy, proposed by Radner. Skip-level reporting outperforms balanced hierarchies in terms of decision speed and in terms of decision quality.
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 InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4397.
Date of creation: Apr 2004
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-13 (All new papers)
- NEP-CDM-2005-02-13 (Collective Decision-Making)
- NEP-GTH-2005-02-13 (Game Theory)
- NEP-MIC-2005-02-13 (Microeconomics)
- NEP-NET-2005-02-13 (Network Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Grüner, Hans Peter, 2007. "Protocol Design and (De-)Centralization," CEPR Discussion Papers 6357, C.E.P.R. Discussion Papers.
- Schulte, Elisabeth & Peter Gruner, Hans, 2007.
"Speed and quality of collective decision making: Imperfect information processing,"
Journal of Economic Theory,
Elsevier, vol. 134(1), pages 138-154, May.
- Grüner, Hans Peter & Schulte, Elisabeth, 2004. "Speed and Quality of Collective Decision-Making, I: Imperfect Information Processing," CEPR Discussion Papers 4179, C.E.P.R. Discussion Papers.
- Grüner, Hans Peter, 2007. "Information Technology, Efficient Restructuring and the Productivity Puzzle," CEPR Discussion Papers 6109, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.