The Human version of Moore-Shannon's Theorem: The Design of Reliable Economic SystemsMichael Kristensen and Thorbjørn Knudsen No 07-08, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies Abstract: Moore & Shannon's theorem is the cornerstone in reliability theory, but cannot be applied to human systems in its original form. A generalization to human systems would therefore be of considerable interest because the choice of organization structure can remedy reliability problems that notoriously plaque business operations, financial institutions, military intelligence and other human activities. Our main result is a proof that provides answers to the following three questions. Is it possible to design a reliable social organization from fallible human individuals? How many fallible human agents are required to build an economic system of a certain level of reliability? What is the best way to design an organization of two or more agents in order to minimize error? On the basis of constructive proofs, this paper provides answers to these questions and thus offers a method to analyze any form of decision making structure with respect to its reliability. Keywords: Organizational design; reliability theory; decision making; project selection (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:aal:abbswp:07-08 Access Statistics for this paper More papers in DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies |
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