Abstract
This paper compares the determination of investment criteriain single- and multi-member organizations. Individualdecisional skills are assumed to be endogenous variables thatdepend on the investment criteria. Our main result specifiesthe condition that determines the relationship between theinvestment criteria in single- and multi-member organizations,given the size of the multi-member organization, the decisionrule it applies and the function relating the individual'sdecisional skills to the investment criterion. Theimplications of our main result are developed for specialorganizations such as hierarchies and polyarchies. Ouranalysis implies that the criteria in a multi-memberorganization may be stricter than the criteria set in asingle-member organization, even though in the former case theorganization may worsen the average decision-making ability ofits members. The analysis can be applied not only in singleand multi-member decision making settings, but also in somecontexts of centralized and decentralized decisions. This isillustrated in the case of decisions by editors ofprofessional journals regarding the acceptance or rejection ofsubmitted papers.
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Ben-Yashar, R., Nitzan, S. Investment Criteria in Single and Multi-Member Economic Organizations. Public Choice 109, 1–13 (2001). https://doi.org/10.1023/A:1012012512441
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DOI: https://doi.org/10.1023/A:1012012512441