Essays in organizational economics

This thesis consists of three theoretical essays that examine the role of organizational architecture in facilitating organizational adaptation to a changing environment. Chapter 1 develops a model of coordinated adaptation where .an organization needs to respond to incoming information about its environment while at the same time retaining coordination between its activities. It analyzes how the allocation of decision rights inside the organization impacts the quality of decision-making and the accuracy of information transmission when information is both soft and distributed inside the organization. The results show that, contrary to the common intuition, the performance differential between centralized and decentralized decision-making is non-monotone in the importance of coordination. Further, both of these common structures are dominated by asymmetric structures in sufficiently asymmetric environments. Finally, if the incentive conflicts between the participants can be made sufficiently small, centralized decision-making is always dominated by decentralized decision-making. Chapter 2 extends the model developed in Chapter 1 to account for the endogeneity of incoming information and the use of monetary incentives to manage incentive conflicts inside the organization.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• Rantakari, Heikki

Advisor dc:contributor.advisor

• Robert Gibbons and Bengt Holström.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/39719

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/39719