Evaluation Problem versus Selection Problem in Organizational Structures
2005-05-31
Research Paper
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We consider a hierarchical organization with two fully rational agents. The goal of the organization is that of selecting the best alternative out of several available, and agents are heterogenous in the accuracy with which they screen the alternatives. We show that, if internal communications between agents is not possible, the ordering of agents affects the performance of the organization. More specifically, we find that the expected payoff of the organization improves when the more accurate agent screens first. Finally, we note that such optimal ordering makes the hierarchy formally identical to one in which the internal communication flow is perfect.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- D70 : Analysis of Collective Decision-Making: General
- D73 : Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D81 : Criteria for Decision-Making under Risk and Uncertainty
Automatically Extracted Terms
- agent
- alternative
- stage
- organization
- signal
- selection
- problem
- agent 2
- c q h
- project
- hierarchy
- communication
- structure
- signal outcomes
- information
- probability
- payoff
- performance
- evaluation
- c q l
