Speed and quality of collective decision making: Imperfect information processing

This paper studies efficient programmed hierarchies as introduced by Radner The organization of decentralized information processing, Econometrica 61(5) (1993) 1109-1146] in which agents cannot process information perfectly. A group of P identical managers has to make a choice between n alternatives. In order to learn which is the best option, the alternatives have to be compared. The evaluation of an alternative takes time and managers are only able to identify the better one of two alternatives with a positive probability. The skip-level reporting tree proposed by Radner is found to be efficient in terms of the dimensions decision cost, decision delay, and decision quality.