Information Aggregation and Communication in Organizations

Philippe Jehiel ()

Management Science, 1999, vol. 45, issue 5, 659-669

Abstract: 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.

Keywords: information; communication; organization (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (20)

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