Balancedness of Real-Time Hierarchical Resource Allocation

29 Pages Posted: 5 Apr 2004

See all articles by Timothy Van Zandt

Timothy Van Zandt

INSEAD - Economics and Political Sciences; Centre for Economic Policy Research (CEPR)

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

Van Zandt, Timothy, Balancedness of Real-Time Hierarchical Resource Allocation (March 2004). Available at SSRN:

Timothy Van Zandt (Contact Author)

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
+33 1 6072 4981 (Phone)
+33 1 6074 6192 (Fax)

Centre for Economic Policy Research (CEPR)

United Kingdom

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