Information Aggregation in Organizations

Doctoral thesis English OPEN
Schulte, Elisabeth (2006)
  • Publisher: Universit├Ąt Mannheim
  • Subject: 330 Wirtschaft

This dissertation contributes to the analysis of information aggregation procedures within organizations. Facing uncertainty about the consequences of a collective decision, information has to be aggregated before making a choice. Two main questions are addressed. Firstly, how well is an organization suited for the aggregation of decision-relevant information? Secondly, how should an organization be designed in order to aggregate information efficiently? The main part deals with information aggregation in committees. A committee is a decision-making institution in which several individuals take part in the decision procedure and possibly hold private, decision-relevant information. We study information aggregation in a committee whose members have heterogeneous preferences. Preference heterogeneity may interfere with information aggregation if the organization members disagree on how the information should be mapped into a decision. We study the performance of majority voting as a mechanism to aggregate information, when agents have the possibility to publicly announce their information before voting takes place. We identify conditions under which full information aggregation is possible. We compare the performance of two alternative decision procedures facing partially conflicting interests among decision makers. The two decision procedures differ with respect to the extent to which they allow communication among decision makers. We find that limiting the individuals' access to communication may enhance decision quality. In Chapter 5, we depart from the committee framework. Decision-relevant information is no longer private, but centrally available. The question is how to efficiently organize the information aggregation procedure. The organization is evaluated in terms of two dimensions, speed and quality of decision making. We assume that it takes time to read information, and that agents make a mistake with a certain probability when carrying out a processing task. The extent of parallel information processing affects the time it takes to reach a decision. The quality of the decision is affected by processing imperfections.
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