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Complexity and organizational architecture

  • Ioannides, Yannis M.

This paper examines how features of organizational architecture, with organizations whose members screen projects, affect organizational screening performance. The paper explores consequences for organizational design of a theorem (attributed to Von Neumann by Moore and Shannon) on how to build reliable networks using unreliable components. The paper examines general properties of committee decision making and shows the superiority of committees with respect to composition, that is when each member of organization is replaced by a replica of the entire organization. The paper links with the modern Condorcet Jury Theorem literature. It also shows that organizational screening performance is sigmoid in individual screening performance for hierarchies of polyarchies and for polyarchies of hierarchies. The supermodularity and sub-modularity properties of organizations’ screening performance allows us to link with results from the theory of teams. When agents are heterogeneous, hierarchies favor sorting and polyarchies favor mixing.

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Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 64 (2012)
Issue (Month): 2 ()
Pages: 193-202

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Handle: RePEc:eee:matsoc:v:64:y:2012:i:2:p:193-202
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505565

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  1. Yannis M. Ioannides, 2004. "Topologies Of Social Interactions," Econometric Society 2004 North American Winter Meetings 287, Econometric Society.
  2. Raaj Kumar Sah, 1991. "Fallibility in Human Organizations and Political Systems," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 67-88, Spring.
  3. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Raaj Kumar Sah & Joseph E. Stiglitz, 1984. "The Architecture of Economic Systems: Hierarchies and Polyarchies," NBER Working Papers 1334, National Bureau of Economic Research, Inc.
  5. Peter M. DeMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion bias, social influence, and uni-dimensional opinions," LSE Research Online Documents on Economics 454, London School of Economics and Political Science, LSE Library.
  6. Visser, Bauke, 2000. "Organizational communication structure and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 231-252, June.
  7. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
  8. Jan W. Rivkin, 2000. "Imitation of Complex Strategies," Management Science, INFORMS, vol. 46(6), pages 824-844, June.
  9. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
  10. Stanley Reiter, 1995. "Coordination and the Structure of Firms," Discussion Papers 1121, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Luigi Marengo & Giovanni Dosi & Paolo Legrenzi & Corrado Pasquali, 1999. "The structure of problem-solving knowledge and the structure of organisations," LEM Papers Series 1999/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  12. repec:cup:cbooks:9780521037891 is not listed on IDEAS
  13. Ioannides, Yannis M., 1987. "On the architecture of complex organizations," Economics Letters, Elsevier, vol. 25(3), pages 201-206.
  14. Szentes, Balazs & Koriyama, Yukio, 2009. "A resurrection of the Condorcet Jury Theorem," Theoretical Economics, Econometric Society, vol. 4(2), June.
  15. Gehrig, Thomas & Régibeau, Pierre & Rockett, Katharine, 1998. "Project Evaluation and Organizational Form," CEPR Discussion Papers 1888, C.E.P.R. Discussion Papers.
  16. Prat, Andrea, 2002. "Should a team be homogeneous?," European Economic Review, Elsevier, vol. 46(7), pages 1187-1207, July.
  17. Sah, Raaj Kumar & Stiglitz, Joseph E, 1988. "Committees, Hierarchies and Polyarchies," Economic Journal, Royal Economic Society, vol. 98(391), pages 451-70, June.
  18. Sah, Raaj Kumar & Stiglitz, Joseph E, 1985. "Human Fallibility and Economic Organization," American Economic Review, American Economic Association, vol. 75(2), pages 292-97, May.
  19. Koh Winston T. H., 1992. "Variable evaluation costs and the design of fallible hierarchies and polyarchies," Economics Letters, Elsevier, vol. 38(3), pages 313-318, March.
  20. repec:cup:cbooks:9780521800563 is not listed on IDEAS
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