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Balancedness of Real-Time Hierarchical Resource Allocation

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  • Van Zandt, Timothy

Abstract

We take the hierarchical resource allocation model in Van Zandt (2003a) and derive a simpler, reduced-form model of balanced hierarchies. This model uses continuous approximations; we derive bounds on the errors due to these approximations. We then give results that indicate that optimal hierarchies in the general model of are approximately balanced. In particular, we show that aggregation should be balanced if the hierarchical structure is balanced, and we show the hierarchical structure should be balanced if aggregation is balanced.

Suggested Citation

  • Van Zandt, Timothy, 2004. "Balancedness of Real-Time Hierarchical Resource Allocation," CEPR Discussion Papers 4276, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:4276
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    References listed on IDEAS

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    1. Timothy Van Zandt, 1995. "Continuous Approximations in the Study of Hierarchies," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 575-590, Winter.
    2. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 809-839.
    3. Timothy Van Zandt, 1997. "Real-Time Hierarchical Resource Allocation," Discussion Papers 1231, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Timothy van Zandt, 1999. "Real-Time Decentralized Information Processing as a Model of Organizations with Boundedly Rational Agents," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 633-658.
    5. Timothy Van Zandt & Roy Radner, 1998. "Real-Time Decentralized Information Processing and Returns to Scale," Discussion Papers 1233, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    6. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-1146, September.
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    Cited by:

    1. Andrea Patacconi, 2005. "Optimal Coordination in Hierarchies," Economics Series Working Papers 238, University of Oxford, Department of Economics.
    2. Van Zandt, Timothy, 2004. "Structure and Returns to Scale of Real-Time Hierarchical Resource Allocation," CEPR Discussion Papers 4277, Centre for Economic Policy Research.
    3. Cho, Myeonghwan, 2010. "Efficient structure of organization with heterogeneous workers," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1125-1139, November.
    4. Van Zandt, Timothy, 2003. "Real-Time Hierarchical Resource Allocation with Quadratic Costs," CEPR Discussion Papers 4022, Centre for Economic Policy Research.

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    Keywords

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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