Resource title

Real-time hierarchical resource allocation with quadratic payoffs

Resource image

image for OpenScout resource :: Real-time hierarchical resource allocation with quadratic payoffs

Resource description

This paper presents a model in which resource allocations are calculated in real time by boundedly rational members of an administrative staff. We consider a class of hierarchical procedures in which information about payoff functions flows up and is aggregated by a hierarchy, while allocations flow down and are disaggregated by the hierarchy with decentralized decision making. We assume that the payoff functions are quadratic and that the payoff parameters follow first-order autoregressive processes. We define a team statistical optimality condition that formalizes the notion of decentralized decision making. We derive a reduced form that can be used to address specific questions about organizational structure and returns to scale.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2003/2003-63.pdf

Resource license

Copyright INSEAD. All rights reserved