On the Design of Hierarchies
Author | : Oliver Hart |
Publisher | : |
Total Pages | : 0 |
Release | : 2005 |
ISBN-10 | : OCLC:1375325967 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book On the Design of Hierarchies written by Oliver Hart and published by . This book was released on 2005 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider an economy that has to decide how assets are to be used. Agents have ideas, but these ideas conflict. We suppose that decision-making authority is determined by hierarchy: each asset has a chain of command, and the most senior person with an idea exercises authority. We analyze the optimal hierarchical structure given that some agents coordinate and other specialize. Among other things, our theory explains why coordinators should typically be senior to specialists and why pyramidal hierarchies may be optimal. Our theory also throws light on the optimal degree of decentralization inside a firm and on firm boundaries.