Advanced Search
MyIDEAS: Login to save this paper or follow this series

Optimal hierarchies with diverse decision-makers

Contents:

Author Info

  • Puschke, Kerstin

Abstract

We analyze the optimal decision-making hierarchy in an organization when decision-makers of limited liability have preferences conflicting with the organization’s objective and exert externalities on their counterparts. In a horizontal hierarchy, every decision is made by a different agent. In a vertical hierarchy, one agent is in charge of all decisions. Only this agent is incentivized. This advantage is outweighed if there is a horizontal hierarchy so that the decision-makers’ preferences are close to the organization’s objective with respect to the decision they are in charge of but far from the organization’s objective for the other decisions. --

Download Info

If 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.
File URL: http://econstor.eu/bitstream/10419/28055/1/541757288.PDF
Download Restriction: no

Bibliographic Info

Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2007/10.

as in new window
Length:
Date of creation: 2007
Date of revision:
Handle: RePEc:zbw:fubsbe:200710

Contact details of provider:
Postal: Garystr. 21, 14195 Berlin (Dahlem)
Phone: (030) 838 2272
Fax: (030) 838 2129
Email:
Web page: http://www.wiwiss.fu-berlin.de/en/index.html
More information through EDIRC

Related research

Keywords: Authority; Decision Rights; Incomplete Contracts;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Grossman, Sanford J & Hart, Oliver, 1985. "The Cost and Benefits of Ownership: A Theory of Vertical and Lateral Integration," CEPR Discussion Papers, C.E.P.R. Discussion Papers 70, C.E.P.R. Discussion Papers.
  2. Eyal Winter, 2004. "Incentives and Discrimination," American Economic Review, American Economic Association, American Economic Association, vol. 94(3), pages 764-773, June.
  3. Schmitz, Patrick W., 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5145, C.E.P.R. Discussion Papers.
  4. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, American Economic Association, vol. 62(5), pages 777-95, December.
  5. Eric Maskin & Yingyi Qian & Chenggang Xu, 1997. "Incentives, Information, and Organizational Form," Working Papers, Stanford University, Department of Economics 97034, Stanford University, Department of Economics.
  6. Yingyi Qian & Gerard Roland & Chenggang Xu, 2006. "Coordination and Experimentation in M-Form and U-Form Organizations," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 114(2), pages 366-402, April.
  7. Philippe Aghion & Jean Tirole, 1994. "Formal and Real Authority in Organizations," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 95-8, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Bester, Helmut, 2005. "Externalities, communication and the allocation of decision rights," Discussion Papers, Free University Berlin, School of Business & Economics 2005/21, Free University Berlin, School of Business & Economics.
  9. Sappington, David, 1983. "Limited liability contracts between principal and agent," Journal of Economic Theory, Elsevier, Elsevier, vol. 29(1), pages 1-21, February.
  10. Dessein, Wouter & Garicano, Luis & Gertner, Robert, 2007. "Organizing for Synergies," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6019, C.E.P.R. Discussion Papers.
  11. Susan Athey & John Roberts, 2001. "Organizational Design: Decision Rights and Incentive Contracts," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 200-205, May.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:200710. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

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.