Optimal Sequential Decision Architectures and the Robustness of Hierarchies and Polyarchies

Published in Social Choice and Welfare, 2005, 24 (3), 397-411. https://doi.org/10.1007/s00355-003-0304-0</p

Context and Aggregation: An Experimental Study of Bias and Discrimination in Organizational Decisions

This paper addresses a notable gap at the intersection of organizational economics and organization science: how does organizational context influence aggregation of individual behavior in organizational decisions? Using basic centralized versus decentralized organizational structures as building blocks for our experimental design, we examine whether assignment of organizational positions, incentive schemes, and structural configuration induce endogenous adaptation in the form of change in reservation levels (bias) or modified discrimination capability in subjects' behavior. We found that evaluators adapted their reservation and discrimination levels in centralized structures, whereas they did not generally adapt their reservation and discrimination levels when placed in decentralized structures. We identify mechanisms that explain these findings; explain how they influence aggregate, organizational behavior; and discuss implications for research and practice

The Optimal Design of Fallible Organizations: Invariance of Optimal Decision Criterion and Uniqueness of Hierarchy and Polyarchy Structures

We present a general framework to study the project selection problem in an organization of fallible decision-makers. We show that when the organizational size and the majority rule for project acceptance are optimized simultaneously, the optimal quality of decision-making, as determined by the decision criterion, is invariant, and depends only on the expertise of decision-makers. This result clarifies that the circumstances under which the decision-making quality varies with the organizational structure are situations where the organizational size or majority rule is restricted from reaching the optimal level. Moreover, in contrast to earlier findings in the literature that the hierarchy and the polyarchy are suboptimal structures, we show that when the size, structure and decision criterion are simultaneously optimized, the hierarchy and the polyarchy are in fact the only possible optimal organizational structures when decision-making costs are present.organizational decision-making, structure, quality, hierarchy, polyarchy

Is Specialization Desirable in Committee Decision Making?

Committee decision making is examined in this study focusing on the role assigned to the committee members. In particular, we are concerned about the comparison between committee performance under specialization and non-specialization of the decision makers.framing, project selection, public policy, collective decision making, committee, uncertain dichotomous choice, specialization, simple majority rule

Evaluation of Uncertain International Markets The Advantage of Flexible Organization Structures

The present article is concerned with organizational flexibility in transnational corporations (TNCs), i.e., larger firms that operate in multiple national markets. Contrasting prior research into entry modes (e.g. joint ventures, greenfield investments, or acquisitions), the present article examines the way the organization of evaluation teams can influence entry and exit decisions of business units. Empirical studies broadly support the claim that TNCs experiment with flexible organizational structures in response to increased levels of turbulence and uncertainty in international markets. However, these advances in the description of TNCs, and more generally in the literature on new organizational forms, have been largely ignored in our theories about evaluation of market opportunities in TNCs and multi-national corporations (MNCs). To address this gap in our knowledge, the present article examines the effects of flexible evaluation teams when TNCs assess the viability of international markets characterized by high levels of uncertainty. Remarkably, we show that TNCs employing flexible teams of (very) fallible evaluators can obtain profits at levels that asymptote optimality. Our main result supports the claim advanced in recent empirical studies. Structural flexibility can help TNCs employing (very) fallible evaluators achieve high levels of performance in conditions of turbulence and uncertainty.Multinational corporations, entry modes

The Optimal Design of Fallible Organizations: Invariance of Optimal Decision Criterion and Uniqueness of Hierarchy and Polyarchy Structures

Published in Social Choice and Welfare, 2005, 25 (1), pp. 207-220. https://doi.org/10.1007/s00355-005-0055-1</p

Complexity, Robustness, and Performance

This paper analyses the relationship between organizational complexity ( the degree of detail of information necessary to correctly assign agents to positions), robustness (the relative loss of performance due to mis-allocated agents), and performance. More complex structures are not necessarily more profitable, but are less robust. One of the least complex structures always performs worst. Superior organizational performance may vanish completely due to mis-allocated agents. Organizational performance can be enhanced through training agents; re-assigning them when adequate knowledge about their characteristics is obtained through monitoring; simplifying the organizational structure; and influencing the environment. The trade-offs involved are analysed

The Condorcet Jury-Theorem with Two Independent Error-Probabilities

The Condorcet jury-theorem is derived from the implicit assumption that jury members may only commit one type of error. In binary decision situations however, two error types may occur, the probability of which is independent of each other. Taking this into account leads to a generalization of the theorem.Group decisions, judicial, imperfect decision-making,