Title

Variable Evaluation Costs and the Design of Fallible Hierarchies and Polyarchies

Publication Type

Journal Article

Publication Date

1992

Abstract

We show that when there are variable evaluation costs, the optimal screening standards in a hierarchy (polyarchy) should become less (more) stringent at higher levels. Also, simple reorganization of the optimal hierarchy or polyarchy may not improve net profits, although results from information theory show that gross profits can be increased.

Discipline

Economics

Research Areas

Applied Microeconomics

Publication

Economics Letters

Volume

38

Issue

3

First Page

313

Last Page

318

ISSN

0165-1765

Identifier

10.1016/0165-1765(92)90077-c

Publisher

Elsevier

Additional URL

http://dx.doi.org/10.1016/0165-1765(92)90077-c

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