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Improving the Organization of Knowledge in Production by Screening Problems

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  • Guilherme Carmona
  • Krittanai Laohakunakorn

Abstract

We extend Garicano’s model of optimal organizations by allowing problems to be screened. We show that when screening is as costly as solving problems, optimal organizations are hierarchies as in Garicano’s model, but when the cost of screening is small, workers screen all problems that they and the top managers cannot solve, those problems that they screen are sent directly to those who can solve them, and those problems that they neither solve nor screen are passed to the top managers. For intermediate values of the screening cost, the optimal organization is a hybrid of the above forms.

Suggested Citation

  • Guilherme Carmona & Krittanai Laohakunakorn, 2024. "Improving the Organization of Knowledge in Production by Screening Problems," Journal of Political Economy, University of Chicago Press, vol. 132(4), pages 1290-1326.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/727285
    DOI: 10.1086/727285
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