The scheduling and organization of periodic associative computation: Efficient networks

This paper characterizes the efficient decentralized networks for calculating the associative aggregate of cohorts of data of a fixed size that arrive periodically. Radner (1993) proposed this problem of periodic parallel associative computation as a model of the ongoing information processing and communication by the administrative staff of a large organization. For a simpler model in which the organization processes a single cohort of data – which is equivalent to the periodic model when the agents are paid only when busy – he found that the efficient networks are hierarchical but quite irregular, even though the computation problem and technology are each symmetric. In the periodic model in which managers are paid even when idle, it becomes important to minimize idle time when scheduling managers to processing tasks. Such scheduling appears more difficult when each problem is processed by an irregular hierarchy, which suggest that hierarchies might be more regular in the periodic model. However, we show that in a class of efficient networks for periodic computation that spans the efficiency frontier, the processing of each cohort is similar to the efficient processing of a single cohort, and the overall organizational structure is not even hierarchical. Received: 15 October 1994 / Accepted: 6 March 1997     

Organizations undertaking complex projects in uncertain environments

Recent evidence suggests that firms’ environments are becoming more complex and uncertain. This paper investigates the relationship between the complexity of a firm’s activities, environmental uncertainty and organizational structure. We assume agents are arranged hierarchically, but decisions can be made at different levels. We model a firm’s activity set as a modified NK landscape. Via simulations, we find that centralized decision making generates a higher payoff in more complex and uncertain environments, and that a flatter structure is better for the organization with centralized decision making, provided the cost of information processing is low enough. Financial Support from Zengin Foundation for Studies on Economics and Finance is gratefully acknowledged.     

STRATEGIES OF EXPANSION AND ORGANIZATIONAL DEVELOPMENTS IN EUROPEAN AND AMERICAN FIRMS 1

Summary The pace of change of the last ten years has challenged the traditional management processes to the point that the key organizational question is no longer to fit new strategies into available organizational patterns but instead to fit the organizational structure to the kind of problems to be faced. However, the intricacy of strategic and structural difficulties is often such that the appraisal of organizational inadequacies may prove difficult: symptoms may be wrongly considered as problems which may in turn be over-or understated so that corrective measures may well be inappropriate. This is why the saying‘When in trouble, reoganize!’is of little practicability. The lack of organizational planning in framing responses to structural problems will more and more make adjustments necessary. In our attempts to define the nature of organizational changes which are likely to occur within business firms in the future, we shall isolate the stragetic decisions related to corporate expansion on a transnational, trans-continental and eventually on an intercontinental scale. We shall start by analysing present organizational patterns — as they reflect decisions made in the past regarding current strategies — and we shall try to outline some possible structural developments as they may be required by the implementation of future strategies.     

Multiprincipals multiagents incentive design

This paper studies a simple setting in which the contractual arrangements which determine the incentives for agents are not designed by a single central planner, but are themselves the outcome of a game among multiple noncooperatively acting principals. The notion of an Epsilon Contracting Equilibrium is introduced to predict the outcome of the contract-design game among principals. Symmetric pure strategy Epsilon Contracting Equlibria may not exist in perfectly symmetric environments. In a symmetric Epsilon Contracting Equilibrium in mixed strategies coordination failure may lead to a suboptimal institutional network in which the agents “cheat” their principals. Received: 14 June 1995 / Accepted: 09 August 1999     

NON-LEARNING ORGANIZATIONS

Whereas organizational learning and unlearning enjoy a well-established reputation in organization theory, non-learning has rarely if ever been discussed. In this article organizational non-learning is characterized, and techniques for non-learning are identified. It is argued that nonlearning organizations have developed a proficiency in ignoring. They may ignore problems and solutions to problems, as well as their own attitudes to these problems and solutions. Non-learning organizations accomplish this essentially by placing problems and potentially problematic issues with somebody else, to be attended to in the future. Their behavior is supported and reinforced by procedures: by the particular distribution of responsibility that procedures entail, and by the fact that procedures recur. A non-learning option allows for organizational discretion. Organizations are free to account for their work in a contradictory manner — realistic and idealistic at the same time. They are free to learn slowly and to take advantage of their learning.     

The not-so-secret-agent: Professional monitors,hierarchies and implementation

Abstract. It is well-known that, when agents in an organization possess private information that is unverifiable by an outside party, games where agents simply announce their information can have multiple equilibria that may impede the successful implementation of the organization's objectives. We show that the introduction of a professional monitor (e.g. auditor, regulator, supervisor) can help to destroy the “bad' equilibria when agents have private information but have incomplete info rmation about others' information. Received: 21 May 1998 / Accepted: 26 May 2000     

Managing Dispersed Knowledge: Organizational Problems,Managerial Strategies,and Their Effectiveness

While there has been much progress in understanding organizational knowledge and knowledge management practices, some questions still remain unresolved. This paper argues that at least one important driver of knowledge‐related organizational problems has been rather neglected so far: that is, the dispersed nature of organizational knowledge. The paper analyses the organizational problems and managerial responses arising from dispersed knowledge. It identifies three drivers by which the dispersedness of knowledge leads to management problems: namely, it creates large numbers, asymmetries, and uncertainty. A number of managerial strategies for dealing with the different components of the problems created by the dispersedness of knowledge are identified and their effectiveness analysed, thereby informing managers as to how best to deal with dispersed knowledge. The analysis of uncertainty‐related implications of dispersed knowledge uncovers an overlooked distinction that is helpful for understanding dispersed knowledge and its managerial implications. This is the distinction between uncertainty and ambiguity, i.e. a strong form of uncertainty that cannot be remedied by the standard strategy of increasing the information available.     

Auctions with endogenous participation

We study endogenous-participation auctions where bidders only know the number of potential participants. After seeing their values for the object, potential participants decide whether or not to enter the auction. They may not want to enter the auction since they have to pay participation costs. We characterize equilibrium bidding strategies and entry decisions for both first- and second-price sealed-bid auctions when participation is endogenous. We show that there is a pure strategy entry equilibrium where only bidders with values greater than a certain cut-off point actually bid. In this context, both types of auctions generate the same expected revenue. We also show that, contrary to the predictions of the fixed number of bidders literature, the seller's expected revenue may decrease when the number of potential participants increases. In addition, we show that it is optimal for the seller to charge an entry fee, which contrasts with results from the existing literature on auctions with entry. As in the fixed-n literature, we show that first-price auctions generate more expected revenue than second-price auctions when buyers are risk-averse. Finally, we characterize the optimal auction – the auction that maximizes the seller's expected revenue – by using a direct revelation mechanism. The optimal auction involves a reserve price larger than the optimal reserve price in the fixed-n literature. The winner's payment is the second highest bid less the participation cost and losers receive a subsidy equal to the participation cost. Received: 17 August 1998 / 21 September 1999     

Rational expectations equilibrium and the strategic choice of costly information

This paper studies costly information acquisition in one-good production economies when agents acquire private information and prices transmit information. Before asset markets open, agents choose the quality of their private information. After this information stage, agents trade assets in sequentially complete markets taking into account their private information and the information revealed by equilibrium prices (rational expectations equilibrium, (Radner, R., 1979. Rational expectations equilibrium: generic existence and the information revealed by prices, Econometrica 47, 655–678.)). An overall equilibrium in asset and information market is defined as a Nash equilibrium of the information game in which agents’ actions are information choices and their utility payoffs are the ex-ante expected utilities of the corresponding rationale expectations equilibrium. This paper shows that for a generic set of economies parameterized by endowments and productivity shocks, an overall equilibrium in information and asset market (a Nash equilibrium of the induced information game) with costly information acquisition and fully-revealing prices exists. In other words, informational efficiency is in general consistent with costly information acquisition.     

Project evaluation and organizational form

In situations of imperfect testing and communication, as suggested by Sah and Stiglitz (AER, 1986), organizational forms can be identified with different rules of aggregating evaluations of individual screening units. In this paper, we discuss the relative merits of polyarchical organizations versus hierarchical organizations in evaluating cost-reducing R&D projects when individual units' decision thresholds are fully endogenous. Contrary to the results of Sah and Stiglitz, we find that the relative merit of an organizational form depends on the curvature of the screening functions of the individual evaluation units. We find that for certain parameters organizations would want to implement asymmetric decision rules across screening units. This allows us to derive sufficient conditions for a polyarchy to dominate a hierarchy. We also find conditions for which the cost curves associated with the two organizational forms cross each other. In this case the optimal organizational form will depend on product market conditions and on the “lumpiness” of cost-reducing R&D.     

Organizational restructuring in response to changes in information-processing technology

This paper examines the effects of changes in information-processing technology on the efficient organizational forms of data-processing in decision-making systems. Data-processing is modelled in the framework of the dynamic parallel processing model of associative computation with an endogenous set-up costs of the processors. In such a model, the conditions for efficient organization of information-processing are defined and the architecture of the efficient structures is considered. It is shown that decreasing returns to scale of the function describing data- processing technology and the information overload of the system are necessary and sufficient conditions for the hierarchical information- processing, respectively. Moreover, the size of the efficient structures is determined exclusively by their information workload and the current state of information-processing technology. Received: 5 June 1996 / Accepted: 17 June 1999     

The human side of mechanism design: a tribute to Leo Hurwicz and Jean-Jacque Laffont

This paper considers the human side of mechanism design, the behavior of economic agents in gathering and processing information and responding to incentives. I first give an overview of the subject of mechanism design, and then examine a pervasive premise in this field that economic agents are rational in their information processing and decisions. Examples from applied mechanism design identify the roles of perceptions and inference in agent behavior, and the influence of systematic irrationalities and sociality on agent responses. These examples suggest that tolerance of behavioral faults be added to the criteria for good mechanism design. In principle-agent problems for example, designers should consider using experimental treatments in contracts, and statistical post-processing of agent responses, to identify and mitigate the effects of agent non-compliance with contract incentives.     

Efficient organization of information processing

The paper examines the application of the concept of economic efficiency to organizational issues of collective information processing in decision making. Information processing is modeled in the framework of the dynamic parallel processing model of associative computation with an endogenous setup cost of the processors. The model is extended to include the specific features of collective information processing in the team of decision makers which may lead to an error in data analysis. In such a model, the conditions for efficient organization of information processing are defined and the architecture of the efficient structures is considered. We show that specific features of collective decision making procedures require a broader framework for judging organizational efficiency than has traditionally been adopted. In particular, and contrary to the results available in economic literature, we show that there is no unique architecture for efficient information processing structures, but a number of various efficient forms. The results indicate that technological progress resulting in faster data processing (ceteris paribus) will lead to more regular information processing structures. However, if the relative cost of the delay in data analysis increases significantly, less regular structures could be efficient. Copyright © 2007 John Wiley & Sons, Ltd.     

Survival and the art of profit maximization

We study the relationship between rationality and economic survival in a simple dynamic model, where agents from different populations interact repeatedly through random matching. An explicit criterion (“bankruptcy”) determines whether agents survive each interaction; all agents are presumed to be aware of this criterion. Survival in each interaction depends on two factors: the strategies agents adopt when they interact, and the wealth levels they bring to the game. The model is completely symmetric with the only difference between the agents of different populations being their objectives. We consider the case where there are two populations of agents in which all agents from one group have as their objective, maximizing the expected profits from each interaction, while all agents from the other attempt simply to maximize the probability of surviving (i.e., not going bankrupt in) the interaction. We show that under the equilibrium dynamics, the proportions of each group in the total population must be bounded away from zero, but the balance is in favor of the survival-probability maximizers in that their numbers as a fraction of total population must always exceed 1/2, and can be arbitrarily close to unity. On the other hand, the fraction of total wealth controlled by the expected profit maximizers must also be at least 1/2, and can asymptotically tend to unity.     

Emergence of anti-coordination through reinforcement learning in generalized minority games

In this paper we propose adaptive strategies to solve coordination failures in a prototype generalized minority game model with a multi-agent, multi-choice environment. We illustrate the model with an application to large scale distributed processing systems with a large number of agents and servers. In our set up, agents are assigned responsibility to complete tasks that require unit time. They request servers to process these tasks. Servers can process only one task at a time. Agents have to choose servers independently and simultaneously, and have access to the outcomes of their own past requests only. Coordination failure occurs if more than one agent simultaneously requests the same server to process tasks at the same time, while other servers remain idle. Since agents are independent, this leads to multiple coordination failures. In this paper, we propose strategies based on reinforcement learning that minimize such coordination failures. We also prove a null result that a large category of probabilistic strategies which attempts to combine information about other agents’ strategies, asymptotically converge to uniformly random choices over the servers.

     

A CULTURAL THEORY OF INFORMATION BIAS IN ORGANIZATIONS

Organizations show an essential cultural pluralism. Taking this into account, we aim at developing a cultural theory of organizations. A central role in this theory is played by information rejection, which can follow any of four different styles: risk absorption, networking, paradigm protection, or expulsion. These can be related to different types of organizational cultures, in particular to markets, hierarchies, and sects. Different kinds of information bias institutionalize different kinds of leadership.     

Methodological problems associated with research on unfair discrimination against racial minorities

Despite the passage of civil rights legislation, racial and ethnic minorities continue to experience unfair discrimination in the workplace. Therefore, considerable research in human resource management and social psychology has examined the factors thought to affect unfair discrimination in organizations [Cox, T. (1993). Cultural diversity in organizations: Theory, research, and practice. San Francisco: Berrett-Koehler]. Although research has focused on unfair discrimination, researchers have argued that the construct and external validity of the results have been adversely affected by methodological problems [e.g., Stone, E.F., Stone, D.L., & Dipboye, R.L. (1992). Stigmas in organizations: Race, handicaps, and physical unattractiveness. In Kelly, K. (Ed.). Issues, theory, and research in industrial and organizational psychology (pp. 385–457). Amsterdam: Elsevier]. Given this critique, the present paper (a) examines the degree to which recent research suffered from a number of methodological problems (e.g., obtrusive measures, non-representative samples, and demand characteristics), (b) identifies strategies for overcoming these problems, and (c) offers recommendations for advancing our understanding of unfair discrimination in organizational contexts.     

The role of public intervention in R & D

The purpose of this paper is threefold: (1) we emphasize the rule of uncertainty in achieving an efficient allocation of resources to R & D activities; (2) we identify and discuss optional mechanisms that are directed at minimizing the role of uncertainty in determining R & D decisions; and (3) we analyze the role of public intervention in R & D via a formal structure. More specifically, we explain why and under what conditions a risk-averse decision-maker will invest less than a government in research and inventive activities. Sufficient conditions that lead to private underinvestment in these activities are established. Furthermore, if the option of buying information exists, then we identify a set of private governmental contracts that may lead to the acceptance of a research project that a priori is unfeasible.     

Discharge Policy Information in the Job Offer Letter: Its Impact on Recruit Perceptions of Psychological Contract Formation and Organizational Attraction

Using a 2 × 2 design, this study incorporates psychological contract theory and the “good cause norm” to investigate discharge policy information and implied promises of job security on reactions to the job offer letter. Results indicate that while embedded implied promises significantly increase perceptions of organizational attraction relative to a control, they demonstrate no discernable effects on recruit perceptions of organizational psychological contract obligations. Furthermore, embedded at-will disclaimers, alone or in combination with implied promises, significantly reduce perceptions of organizational attractiveness and organizational psychological contract obligations. Implications are discussed.