Participation and the Location of Decision Making in the Firm

Abstract Katzner, Donald W.—Participation and the Location of Decision Making in the Firm This paper is concerned with the identification, when there is more than one decision maker, of the optimal level in the authority structure of the firm at which a given decision is made. Its main point is that, for any particular decision, the optimal decision making level is biased away from the level at which the probability of correctness is highest and in a downward direction toward the shop floor. The analysis focuses, in part, on the process costs of making and implementing decisions; it is based on the Condorcet Jury Theorem and its proof. J. Comp. Econom., March 1999, 27(1), pp. 150–167. University of Massachusetts, Amherst, Massachusetts 01003