Hierarchical reporting, aggregation, and information cascades

Anil Arya (), Jonathan Glover and Brian Mittendorf
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Jonathan Glover: Carnegie Mellon University, USA, Postal: Carnegie Mellon University, USA
Brian Mittendorf: Yale School of Management, USA, Postal: Yale School of Management, USA

Managerial and Decision Economics, 2006, vol. 27, issue 5, 355-362

Abstract: Aggregation is commonly associated with loss of information. In contrast, this paper shows that aggregation can actually enhance information down-the-road by deterring information cascades. In particular, when hierarchical tiers forward only aggregate recommendations rather than nitty-gritty details, it increases the uncertainty faced by subsequent tiers. This makes individuals at higher levels more willing to rely on and convey their own views rather than simply rubber stamping suggestions from lower levels. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:27:y:2006:i:5:p:355-362

DOI: 10.1002/mde.1267

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