Publication Type

Journal Article

Version

acceptedVersion

Publication Date

6-1994

Abstract

Individuals typically make errors in evaluating information. In this paper, we consider a project selection problem, where fallible managers screen projects sequentially, and provide independent opinions on its quality. We compare the relative performance of the hierarchy and polyarchy when η (n > 2) managers are employed to evaluate projects. In addition to generalizing the existing results on the optimal screening standards, I discuss and characterize the optimal organizational size, and how the relative desirability of the two sequential decision processes are affected by changing the project quality. Finally, I also discuss the effect of variable evaluation costs on the optimal evaluation standards.

Keywords

Polyarchy, Project management, Variable costs, Management hierarchy, Gross profits, Comparative advantage, Management decisions, Data collection, Profitability

Discipline

Economics | Economic Theory

Research Areas

Applied Microeconomics

Publication

Journal of Institutional and Theoretical Economics

Volume

150

Issue

2

First Page

362

Last Page

374

ISSN

1614-0559

Publisher

Mohr Siebeck

Additional URL

https://www.jstor.org/stable/40751667

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