Hierarchical Economic Agents and their Interactions

We present a new type of spin market model, populated by hierarchical agents, represented as configurations of sites and arcs in an evolving network. We describe two analytic techniques for investigating the asymptotic behavior of this model: one based on the spectral theory of Markov chains and another exploiting contingent submartingales to construct a deterministic cellular automaton that approximates the stochastic dynamics. Our study of this system documents a phase transition between a sub-critical and a super-critical regime based on the values of a coupling constant that modulates the tradeoff between local majority and global minority forces. In conclusion, we offer a speculative socioeconomic interpretation of the resulting distributional properties of the system.Comment: 38 pages, 13 figures, presented at the 2013 WEHIA conference; to appear in Journal of Economic Interaction and Coordination, to appear in Journal of Economic Interaction and Coordinatio

Основания общей теории социально-экономической координации

The methodological foundation for building a general theory of socio-economic coordination, the need for which is caused by the ongoing digitalization, including coordination processes, are considered. An adequate theoretical instrument is required to analyze the possible socio-economic consequences of changes in coordination mechanisms. Due to the special place in the economy of the coordination processes, their improvement can become a new source of significant socio-economic development. In the proposed study, the ideas of the shared mental model of the participants in joint activities developed in the cognitive sciences are used as the initial basis for creating the required theory. In this context, the fundamental process of coordination of socio-economic activities is considered, based on the ability of agents to coordinate activities in direct and indirect communications between them. A description of the general scheme of the coordinating activity of agents is proposed, the various configurations of which, framed by the institutional structures, form the coordination mechanisms. The market, hierarchical and network coordination mechanisms are presented as special cases of the general scheme. The general conditions for the performance and success of various configurations of coordinating activities have been analyzed, including as an optimization problem. For economic activity, the specificity of its coordination is considered, which consists in the formation of a hybrid form of coordination. The principles of systematization and classification of the processes of coordination of both economic activity and non-economic activity are proposed. The features and possibilities of improving coordination mechanisms through digitalization of the coordinating activities of agents are considered. On this basis, clarifications of the theoretical picture of the socio-economic world are proposed. The idea of building a unified coordination mechanism that could serve the all needs of agents in coordinating their activities, both economic and social, is discussed

Division of Labour and Social Coordination Modes : A simple simulation model

This paper presents a preliminary investigation of the relationship between the process of functional division of labour and the modes in which activities and plans are coordinated. We consider a very simple production process: a given heap of bank-notes has to be counted by a group of accountants. Because of limited individual capabilities and/or the possibilities of mistakes and external disturbances, the task has to be divided among several accountants and a hierarchical coordination problem arises. We can imagine several different ways of socially implementing coordination of devided tasks. 1) a central planner can compute the optimal architecture of the system; 2) a central planner can promote quantity adjustments by moving accountants from hierarchical levels where there exist idle resources to levels where resources are insufficient; 3) quasi-market mechanisms can use quantity or price signals for promoting decentralized adjustments. By means of a simple simulation model, based on Genetic Algorithms and Classifiers Systems, we can study the dynamic efficiency properties of each coordination mode and in particular their capability, speed and cost of adaptation to changing environmental situations (i.e. variations of the size of the task and/or variations of agents' capabilities). Such interesting issues as returns to scale, specialization and workers exploitation can be easily studied in the same model

Virtuous and Adverse Selection within Economic Organizations

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On the (Sub)optimality of Multi-tier Hierarchies: Coordination versus Motivation

This paper studies internal organization of a firm using an incomplete contracting approach a la Grossman-Hart-Moore and Aghion-Tirole. The two key ingredients of our model are externalities among tasks that require coordination, and investment in task-specific human capital. We compare three types of organizational structures: centralization where the decision authority for all tasks is given to the party without task-specific human capital, decentralization where the decision authority for each task is given to the party with necessary human capital, and hierarchical delegation where the decision authority is allocated in a hierarchical fashion. Centralization is optimal when externalities and the requisite coordination are the main issue in organization design. Decentralization is optimal if the investment in human capital is more important. Hierarchical delegation is optimal in the intermediate case. We also discuss the optimal pattern of hierarchical delegation as well as several directions extending the basic model.Delegation; Incomplete Contracts; Hierarchy

ON THE (SUB) OPTIMALITY OF MULTI-TIER HIERARCHIES: COORDINATION VERSUS MOTIVATION

This paper studies internal organization of a firm using an incomplete contracting approach `a la Grossman-Hart-Moore and Aghion-Tirole. The two key ingredients of our model are externalities among tasks that require coordination, and investment in task-specific human capital. We compare three types of organizational structures: centralization where the decision authority for all tasks is given to the party without task-specific human capital, decentralization where the decision authority for each task is given to the party with necessary human capital, and hierarchical delegation where the decision authority is allocated in a hierarchical fashion. Centralization is optimal when externalities and the requisite coordination are the main issue in organization design. Decentralization is optimal if the investment in human capital is more important. Hierarchical delegation is optimal in the intermediate case. We also discuss the optimal pattern of hierarchical delegation as well as several directions extending the basic model.Delegation, Incomplete Contracts, Hierarchy