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Organization Structure

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  • Marschak, Thomas

Abstract

This Chapter concerns formal models of organizations that regularly acquire information about a changing environment in order to find actions which are appropriate to the new environment. Some or all members of the organization are specialists. Each of them privately learns something about a particular aspect of the new environment. The organization operates a {\it mechanism}, which assembles relevant pieces of the specialists' private observations and uses the assembled information to obtain the desired new action. The mechanism has various informational costs and they are measured in a precise way. The research seeks to characterize mechanisms that strike an appropriate balance between informational cost and the performance of the mechanism's final actions. As costs drop, due to improved Information Technology, the properties of good mechanisms, and hence the structure of the organizations that adopt them, may change. The Chapter starts by examining research in which the organization's members reliably follow the mechanism's rules and so incentives are not an issue. It then turns to research in which each member is self-interested and needs an inducement in order to make the informational efforts that the mechanism requires. A number of unmet Research Challenges are identified.

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  • Marschak, Thomas, 2006. "Organization Structure," MPRA Paper 81518, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81518
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    Cited by:

    1. Zhiling Guo & Gary J. Koehler & Andrew B. Whinston, 2012. "A Computational Analysis of Bundle Trading Markets Design for Distributed Resource Allocation," Information Systems Research, INFORMS, vol. 23(3-part-1), pages 823-843, September.
    2. Prat, Andrea & Garicano, Luis, 2011. "Organizational Economics with Cognitive Costs," CEPR Discussion Papers 8372, C.E.P.R. Discussion Papers.
    3. Thomas Marschak, 2004. "Information Technology and the Organization of Firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 473-515, September.

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    Keywords

    economics of organization;

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General

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