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Efficient organization of information processing

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  • Jacek Cukrowski

    (United Nations Development Programme, Europe and the CIS Bratislava Regional Centre, Grosslingova 35, 81109 Bratislava, Slovak Republic)

  • Manfred M. Fischer

    (Institute for Economic Geography and GIScience, Vienna University of Economics and Business Administration, Nordbergstr 15|4|A, A-1090 Vienna, Austria)

Abstract

The paper examines the application of the concept of economic efficiency to organizational issues of collective information processing in decision making. Information processing is modeled in the framework of the dynamic parallel processing model of associative computation with an endogenous setup cost of the processors. The model is extended to include the specific features of collective information processing in the team of decision makers which may lead to an error in data analysis. In such a model, the conditions for efficient organization of information processing are defined and the architecture of the efficient structures is considered. We show that specific features of collective decision making procedures require a broader framework for judging organizational efficiency than has traditionally been adopted. In particular, and contrary to the results available in economic literature, we show that there is no unique architecture for efficient information processing structures, but a number of various efficient forms. The results indicate that technological progress resulting in faster data processing (ceteris paribus) will lead to more regular information processing structures. However, if the relative cost of the delay in data analysis increases significantly, less regular structures could be efficient. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • Jacek Cukrowski & Manfred M. Fischer, 2007. "Efficient organization of information processing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 13-26.
  • Handle: RePEc:wly:mgtdec:v:28:y:2007:i:1:p:13-26 DOI: 10.1002/mde.1305
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    References listed on IDEAS

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    1. Andrzej Baniak & Jacek Cukrowski, 1999. "Organizational restructuring in response to changes in information-processing technology," Review of Economic Design, Springer;Society for Economic Design, vol. 4(4), pages 295-305.
    2. Barton L. Lipman, 1995. "Information Processing and Bounded Rationality: A Survey," Canadian Journal of Economics, Canadian Economics Association, vol. 28(1), pages 42-67, February.
    3. Prat, Andrea, 1997. "Hierarchies of Processors with Endogenous Capacity," Journal of Economic Theory, Elsevier, vol. 77(1), pages 214-222, November.
    4. VAN ZANDT, Timothy, 1995. "Continuous Approximations in the Study of Hierarchies," CORE Discussion Papers 1995002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Michael Keren & David Levhari, 1979. "The Optimum Span of Control in a Pure Hierarchy," Management Science, INFORMS, vol. 25(11), pages 1162-1172, November.
    6. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 809-839.
    7. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-1146, September.
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