Information gathering in organizations: Equilibrium, welfare, and optimal network structure

Antoni Calvó-Armengol, Joan de Martí Beltran

    Research output: Contribution to journalArticleResearchpeer-review

    28 Citations (Scopus)

    Abstract

    We model an organization as a game in which all agents share a common decision problem and some level of coordination is necessary between individual actions. Agents have individual private information concerning the task they have to perform, and they share this private information through pairwise channels of communication. We analyze how this communication pattern, modeled by means of a network structure, affects individual behavior and aggregate welfare. In the unique equilibrium of this Bayesian game, each agent's optimal action depends on a properly defined knowledge index that measures how the aggregation of information helps him to infer higher-order beliefs about other's information after communication. Adding communication channels is not always beneficial for the organization because it can lead to miscoordination. We single out the geometry of interagent communication links that the manager could implement in order to improve the organization's performance. © 2009 by the European Economic Association.
    Original languageEnglish
    Pages (from-to)116-161
    JournalJournal of the European Economic Association
    Volume7
    Issue number1
    DOIs
    Publication statusPublished - 12 Oct 2009

    Fingerprint Dive into the research topics of 'Information gathering in organizations: Equilibrium, welfare, and optimal network structure'. Together they form a unique fingerprint.

    Cite this