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Optimal Information Transmission in Organizations: Search and Congestion

Cabrales, Antonio and Arenas, Àlex and Díaz-Guilera, Albert and Guimerà, Roger and Vega-Redondo, Fernando (2004) Optimal Information Transmission in Organizations: Search and Congestion. Working Paper. Fondazione Eni Enrico Mattei Working Papers 2004.77.

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We propose a stylized model of a problem-solving organization whose internal communication structure is given by a fixed network. Problems arrive randomly anywhere in this network and must find their way to their respective “specialized solvers” by relying on local information alone. The organization handles multiple problems simultaneously. For this reason, the process may be subject to congestion. We provide a characterization of the threshold of collapse of the network and of the stock of floating problems (or average delay) that prevails below that threshold. We build upon this characterization to address a design problem: the determination of what kind of network architecture optimizes performance for any given problem arrival rate. We conclude that, for low arrival rates, the optimal network is very polarized (i.e. star-like or “centralized”), whereas it is largely homogenous (or “decentralized”) for high arrival rates. We also show that, if an auxiliary assumption holds, the transition between these two opposite structures is sharp and they are the only ones to ever qualify as optimal. Keywords: Networks, information transmission, search, organization design.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Networks; Information transmission; Search; Organization design
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 06 Jan 2013 17:40
Last Modified: 06 Jan 2013 17:40

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