Committees, hierarchies and polyarchies

Economic Journal, Volume 98, Number 391, June 1988, pages 451-470

Princeton University, Department of Economics, Woodrow Wilson School of Public & International Affairs, John M. Olin Program for the Study of Economic Organization and Public Policy, Discussion Paper No. 5

38 Pages Posted: 22 May 2012 Last revised: 26 Jun 2012

See all articles by Raaj Kumar Sah

Raaj Kumar Sah

University of Chicago

Joseph E. Stiglitz

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: September 1987

Abstract

This paper examines optimal decision making under three different organizational forms: committees, hierarchies and polyarchies. Our focus is on the trade-off between errors of rejecting good projects versus errors of accepting bad projects, and on the trade-off between gains from more extensive evaluations of projects versus costs of evaluation. We characterize the optimal sizes of these organizations (as well as the optimal level of consensus in committees), and then analyze how these optima change under different organizational environments. We also analyze the influence of organizational environment on the relative performance of these alternative organizational forms.

Keywords: Committees, Organization, Hierarchy, Polyarchy

JEL Classification: D20, D21, D23, D70, D71, L22

Suggested Citation

Sah, Raaj Kumar and Stiglitz, Joseph E., Committees, hierarchies and polyarchies (September 1987). Economic Journal, Volume 98, Number 391, June 1988, pages 451-470; Princeton University, Department of Economics, Woodrow Wilson School of Public & International Affairs, John M. Olin Program for the Study of Economic Organization and Public Policy, Discussion Paper No. 5. Available at SSRN: https://ssrn.com/abstract=2062561

Raaj Kumar Sah (Contact Author)

University of Chicago ( email )

Chicago, IL 60637
United States
+1 773 288 1117 (Phone)

Joseph E. Stiglitz

Columbia Business School - Finance and Economics ( email )

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HOME PAGE: http://www.josephstiglitz.com

National Bureau of Economic Research (NBER) ( email )

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