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Communication and Behavior in Organizations: An Experiment

Evdokimov, Piotr and Garfagnini, Umberto (2018) Communication and Behavior in Organizations: An Experiment Quantitative Economics.

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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.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
Evdokimov, Piotr
Date : 2018
Copyright Disclaimer : Copyright 2018 The Author(s). Published under a Creative Commons Attribution-NonCommercial license.
Uncontrolled Keywords : communication, coordination, decentralization, experiment
Depositing User : Melanie Hughes
Date Deposited : 03 Oct 2018 11:22
Last Modified : 03 Oct 2018 11:23

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