Balancedness of Real-Time Hierarchical Resource Allocation
29 Pages Posted: 5 Apr 2004
Date Written: March 2004
We take the hierarchical resource allocation model in Van Zandt (2003a) and derive a simpler, reduced-form model of balanced hierarchies. This model uses continuous approximations; we derive bounds on the errors due to these approximations. We then give results that indicate that optimal hierarchies in the general model of are approximately balanced. In particular, we show that aggregation should be balanced if the hierarchical structure is balanced, and we show the hierarchical structure should be balanced if aggregation is balanced.
Keywords: Decentralization, hierarchies, bounded rationality, resource allocation, real-time computation
JEL Classification: D23, D83
Suggested Citation: Suggested Citation