Information Aggregation and Communication in Organizations

Operating units must communicate their private information regarding decisions to be taken in organizations. This paper characterizes the optimal communication structures assuming that (i) a decision maker is fired whenever he makes a decision that proves wrong ex post relative to the status quo; and (ii) direct communication in a group of kunits may result in the loss of messages with a probability that solely depends on the group size. Several levels of partitioning with direct communication taking place in each group are required. It is shown that there exists a group size that allows communication technology to be exploited optimally: The optimal communication structure is such that it is essentially composed of groups of this size only at every level of partitioning.

• 저널Management Science · 45(5) · 659–669
• 토픽Auction Theory and Applications · Management Science and Operations Research
• DOI10.1287/mnsc.45.5.659
• 저자Philippe Jéhiel