A comment on Koh’s “The optimal design of fallible organizations: invariance of optimal decision threshold and uniqueness of hierarchy and polyarchy structures”

Min Zhu, Chang Liu and You-Gan Wang ()
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Min Zhu: Queensland University of Technology
Chang Liu: University of Queensland
You-Gan Wang: Queensland University of Technology

Social Choice and Welfare, 2017, vol. 48, issue 2, No 7, 385-392

Abstract: Abstract Koh (Soc Choice Welf 25:207–220, 2005) studied the project evaluation problem when decision-makers in an organization are fallible and showed that in the absence of evaluation costs the optimal organization size and the optimal majority rule are not unique. We show that, in the absence of evaluation costs, the optimal organization size is $$\infty $$ ∞ , which is also conventional because more evaluations can always lead to better judgment. Thus, more evaluations are desirable when there are no additional costs. Koh (Soc Choice Welf 25:207–220, 2005) also claimed that, in the presence of evaluation costs, polyarchy and hierarchy are the only possible optimal structures. We disprove this conclusion using a simple numerical example.

Keywords: Optimal Structure; Exhaustive Search; Expected Payoff; Evaluation Cost; Organization Size (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s00355-016-1009-5

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