Optimal information transmission in organizations: Search and congestion

Àlex Arenas, Antonio Cabrales, Albert Díaz-Guilera, Roger Guimerà and Fernando Vega

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We propose a stylized model of a problem-solving organization whose internal communication structure is given by a fixed network. Problems arrive randomly anywhere in this network and must find their way to their respective “specialized solvers” by relying on local information alone. The organization handles multiple problems simultaneously. For this reason, the process may be subject to congestion. We provide a characterization of the threshold of collapse of the network and of the stock of foating problems (or average delay) that prevails below that threshold. We build upon this characterization to address a design problem: the determination of what kind of network architecture optimizes performance for any given problem arrival rate. We conclude that, for low arrival rates, the optimal network is very polarized (i.e. star-like or “centralized”), whereas it is largely homogenous (or “decentralized”) for high arrival rates. We also show that, if an auxiliary assumption holds, the transition between these two opposite structures is sharp and they are the only ones to ever qualify as optimal.

Keywords: Networks; information transmission; search; organization design (search for similar items in EconPapers)
JEL-codes: D20 D24 D83 L22 L23 (search for similar items in EconPapers)
Date: 2003-06
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Optimal information transmission in organizations: search and congestion (2010)
Working Paper: Optimal Information Transmission in Organizations: Search and Congestion (2004)
Working Paper: Optimal Information Transmission in Organizations: Search and Congestion (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:698

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