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Organizing data analytics

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  • Alonso, Ricardo
  • Câmara, Odilon

Abstract

We develop a theory of credible skepticism in organizations to explain the main tradeoffs in organizing data generation, analysis, and reporting. In our designer-agent-principal game, the designer selects the information privately observed by the agent who can misreport it at a cost, whereas the principal can audit the report. We study three organizational levers: tampering prevention, tampering detection, and the allocation of the experimental-design task. We show that motivating informative experimentation while discouraging misreporting are often conflicting organizational goals. To incentivize experimentation, the principal foregoes a flawless tampering detection/prevention system and separates the tasks of experimental design and analysis.

Suggested Citation

  • Alonso, Ricardo & Câmara, Odilon, 2023. "Organizing data analytics," LSE Research Online Documents on Economics 120780, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:120780
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    References listed on IDEAS

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    More about this item

    Keywords

    strategic experimentation; Bayesian persuasion; tampering; organizational design; information technology; audit;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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