Communication and behavior in organizations: An experiment

Artikel

We design a laboratory experiment to study behavior in a multidivisional organization. The organization faces a trade-off between coordinating its decisions across the divisions and meeting division-specific needs that are known only to the division managers, who can communicate their private information through cheap talk. While the results show close to optimal communication, we also find systematic deviations from optimal behavior in how the communicated information is used. Specifically, subjects' decisions show worse than predicted adaptation to the needs of the divisions in decentralized organizations and worse than predicted coordination in centralized organizations. We show that the observed deviations disappear when uncertainty about the divisions' local needs is removed and discuss the possible underlying mechanisms.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Quantitative Economics ; ISSN: 1759-7331 ; Volume: 10 ; Year: 2019 ; Issue: 2 ; Pages: 775-801 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Game Theory and Bargaining Theory: General ; Design of Experiments: Laboratory, Group Behavior
• Subject: Communication ; coordination ; decentralization ; experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Evdokimov, Piotr ; Garfagnini, Umberto
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2019

Further information

• DOI: doi:10.3982/QE809
• Handle: http://hdl.handle.net/10419/217156