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http://hdl.handle.net/10419/28055
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| Title: | | Optimal hierarchies with diverse decision-makers  |
| Authors: | | Puschke, Kerstin |
| Issue Date: | | 2007 |
| Series/Report no.: | | Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft der Freien Universität Berlin 2007/10 |
| Abstract: | | We analyze the optimal decision-making hierarchy in an organization when decision-makers of limited liability have preferences conflicting with the organizations objective and exert externalities on their counterparts. In a horizontal hierarchy, every decision is made by a different agent. In a vertical hierarchy, one agent is in charge of all decisions. Only this agent is incentivized. This advantage is outweighed if there is a horizontal hierarchy so that the decision-makers preferences are close to the organizations objective with respect to the decision they are in charge of but far from the organizations objective for the other decisions. |
| Subjects: | | Authority Decision Rights Incomplete Contracts |
| JEL: | | D23 D86 L23 |
| ISBN: | | 3938369582 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Diskussionsbeiträge, FB Wirtschaftswissenschaft, FU Berlin
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