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Information Aggregation and Communication in Organizations

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  • Philippe Jehiel

    (C.E.R.A.S.-E.N.P.C, 28 rue des Saints-Pères, 75007 Paris, France and University College London)

Abstract

Operating units must communicate their private information regarding decisions to be taken in organizations. This paper characterizes the optimal communication structures assuming that (i) a decision maker is fired whenever he makes a decision that proves wrong ex post relative to the status quo; and (ii) direct communication in a group of kunits may result in the loss of messages with a probability that solely depends on the group size. Several levels of partitioning with direct communication taking place in each group are required. It is shown that there exists a group size that allows communication technology to be exploited optimally: The optimal communication structure is such that it is essentially composed of groups of this size only at every level of partitioning.

Suggested Citation

  • Philippe Jehiel, 1999. "Information Aggregation and Communication in Organizations," Management Science, INFORMS, vol. 45(5), pages 659-669, May.
    • Handle: RePEc:inm:ormnsc:v:45:y:1999:i:5:p:659-669
    DOI: 10.1287/mnsc.45.5.659
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    Cited by:

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    2. John W. Boudreau, 2004. "50th Anniversary Article: Organizational Behavior, Strategy, Performance, and Design in Management Science," Management Science, INFORMS, vol. 50(11), pages 1463-1476, November.
    3. Jeanne Hagenbach & Frédéric Koessler, 2010. "Strategic Communication Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(3), pages 1072-1099.
    4. Myong-Hun Chang & Joseph E. Harrington, 2000. "Centralization vs. Decentralization in a Multi-Unit Organization: A Computational Model of a Retail Chain as a Multi-Agent Adaptive System," Management Science, INFORMS, vol. 46(11), pages 1427-1440, November.
    5. Grüner, Hans Peter, 2009. "Information technology: Efficient restructuring and the productivity puzzle," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 916-929, December.
    6. Hagenbach, Jeanne, 2011. "Centralizing information in networks," Games and Economic Behavior, Elsevier, vol. 72(1), pages 149-162, May.
    7. Raghul S Venkatesh, 2018. "On Information Aggregation in International Alliances," AMSE Working Papers 1855, Aix-Marseille School of Economics, France, revised Jul 2019.
    8. Grüner, Hans Peter, 2007. "Information Technology, Efficient Restructuring and the Productivity Puzzle," CEPR Discussion Papers 6109, C.E.P.R. Discussion Papers.
    9. Albino, Vito & Pontrandolfo, Pierpaolo & Scozzi, Barbara, 2002. "Analysis of information flows to enhance the coordination of production processes," International Journal of Production Economics, Elsevier, vol. 75(1-2), pages 7-19, January.
    10. Andrea Patacconi, 2005. "Optimal Coordination in Hierarchies," Economics Series Working Papers 238, University of Oxford, Department of Economics.
    11. Grüner, Hans Peter, 2007. "Protocol Design and (De-)Centralization," CEPR Discussion Papers 6357, C.E.P.R. Discussion Papers.
    12. Grüner, Hans Peter & Schulte, Elisabeth, 2010. "Speed and quality of collective decision making: Incentives for information provision," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 734-747, December.
    13. Federico Vaccari, 2022. "Efficient Communication in Organizations," Papers 2211.13605, arXiv.org, revised Apr 2023.
    14. Jeanne Hagenbach, 2009. "Centralizing Information in Networks," Post-Print halshs-00367894, HAL.
    15. 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.
    16. Hans Peter Grüner, 2010. "Speed and Quality of Collective Decision Making: Incentives for Information Provision," Post-Print hal-00911831, HAL.
    17. Hans Peter Grüner & Elisabeth Schulte, 2004. "Speed and Quality of Collective Decision Making: Incentives for," Levine's Bibliography 122247000000000417, UCLA Department of Economics.
    18. Tim Willems, 2013. "Political Accountability and Policy Experimentation: Why to Elect Left-Handed Politicians?," Economics Series Working Papers 647, University of Oxford, Department of Economics.

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