chapter 12 decision rights the level of empowerment
TRANSCRIPT
Assigning tasks and decision rights
• Production process involves tasks bundled into jobs
• Job dimensions– variety of tasks
• few or many
– decision authority• limited or broad
Centralization versus decentralization
benefits of decentralization• Effective use of local knowledge
– local tastes and preferences– price sensitivities of particular
customers
• Conservation of management time– senior management focus on strategy
• Training and motivation for local managers
Centralization versus decentralization
costs of decentralization• Potential agency problems
– effective control systems may be expensive
• Coordination costs and failures• Less effective use of central
information
Group or “Team” Decisions
• Often decisions are made by a committee.+ Benefits of team decision making
+ improved use of dispersed specific knowledge+ employee buy-in+ limit influence (cost)
- Costs of team decision making- free-rider problems- slower- “group-think”- aggregation problems
Group Think
What seems like several independent viewpoints is really one.
ex: An urn has either 80% red balls and 20% blue balls or the reverse.
Group Think
What seems like several independent viewpoints is really one.
ex: An urn has either 80% red balls and 20% blue balls or the reverse.
Group Think
What seems like several independent viewpoints is really one.
ex: An urn has either 80% red balls and 20% blue balls or the reverse.
Observe a red ball and know that previous
person guessed 80% red.
Group Think
What seems like several independent viewpoints is really one.
ex: An urn has either 80% red balls and 20% blue balls or the reverse.
Observe a blue ball and know that previous
2 people guessed 80% red.
Group Think
What seems like several independent viewpoints is really one.
ex: An urn has either 80% red balls and 20% blue balls or the reverse.
Observe a blue ball and know that previous
3 people guessed 80% red.
Group Think
What seems like several independent viewpoints is really one.
ex: An urn has either 80% red balls and 20% blue balls or the reverse.
Observe a blue ball and know that previous
all people guessed 80% red.
Aggregating Group Preferences
• Consensus – great if you can get it.
• Majority Votingis subject to strategic manipulation
Person 1 A>B>C
Person 2 B>C>A
Person 3 C>A>B
Majority Voting
May’s TheoremAnything that has the following 3 properties is equivalent to majority voting.
symmetric – one’s ID does not matterneutral – if all preferences are reversed so is the
outcomepositive responsive – if no one thinks worse of
option x and someone thinks better of it then option x should fare no worse.
Borda Count
Each person ranks options and get more points for higher ranks.
ex: who are the top 2 college football teams?
AP O> U> A
Coaches U> O> AComputerA> U> O
Borda Count
Each person ranks options and get more points for higher ranks.
ex: who are the top 2 college football teams?
AP O> U> A> T> G
Coaches U> O> A> T> GComputerA> T> U> G> O
Arrow’s Impossibility Theorem
A social choice function cannot have all fo the following properties
1) Pareto – if we all prefer A to B then A is ranked higher than B.
2) Independence of Irrelevant Alternatives-how two options compare does not depended on the ranking of any other options.
3) Non-dictatorial – the rankings are not simply one member of the groups preferences.