Team Theory and Decentralized Resource Allocation

Download or read book Team Theory and Decentralized Resource Allocation written by Kenneth J. Arrow and published by . This book was released on 1982 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: The traditional discussion of the price system and alternative forms of decentralized resource allocation in organizations and entire economics has an ambivalent attitude to the ease of transferring information from one locus in the economic system to another. On the one hand, the very need for decentralization is based on the assumption that the transmission of information is costly. If this were not so, there would be no reason not to transfer all information on the availability of resources and the technology of production to one place and compute at one stroke the optimum allocation of resources. On the other hand, the literature has tended to seek algorithms which, in some sense, minimize the amount of information transferred but which at the same time yield in the end the fully optimal allocation of resources. In short, there is no true trade-off between information costs and other resource costs.