Balancedness of Real-Time Hierarchical Resource Allocation

Timothy Van Zandt

No 4276, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We take the hierarchical resource allocation model in Van Zandt (2003a) and derive a simpler, reduced-form model of balanced hierarchies. This model uses continuous approximations; we derive bounds on the errors due to these approximations. We then give results that indicate that optimal hierarchies in the general model of are approximately balanced. In particular, we show that aggregation should be balanced if the hierarchical structure is balanced, and we show the hierarchical structure should be balanced if aggregation is balanced.

Keywords: Decentralization; Hierarchies; Bounded rationality; Resource allocation; Real-time computation (search for similar items in EconPapers)
JEL-codes: D23 D83 (search for similar items in EconPapers)
Date: 2004-03
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Citations: View citations in EconPapers (4)

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