Abstract
This paper considers the problem of determining the optimal design of public organizations in terms of maximizing their reliability against institutional failures. To capture both the individual and the system-level aspects of organizational decisionmaking, first we present an analytical model that characterizes the optimal decision behavior of a single decision maker (unit, agent, in general: DM) in the context of a binary decision task. In this sense, reliability of a DM against the two possible error types: implementation of the wrong policy (error of comission, Type I error) and failure to act when it is necessary (error of omission, Type II error) are interpreted as the result of a particular decision strategy. Individual expertise is represented in the form of a Relative Operating Characteristic (ROC) curve that, in turn, depicts the necessary trade-off between the two errors when selecting an appropriate decision strategy. Component decisions are then combined along the lines of organizational structure which is described using a graph formalism. We show that the task of finding the best organizational design involves a joint optimization over structure and strategy, and implement the normative model in the context of a detailed example. Our numerical results suggest that when DMs coordinate their decision rules, there is little difference in the performance of various organizational structures.
Similar content being viewed by others
Explore related subjects
Discover the latest articles, news and stories from top researchers in related subjects.References
Allison, G. (1971),Essence of Decision: Explaining the Cuban Missile Crisis. Boston, MA: Little Brown.
Batchelder, W.H. and A.K. Romney (1986), “The Statistical Analysis of a General Condorcet Model for Dichotomous Choice Situations,”Information Pooling and Group Decision Making: Proceedings of the Second University of California, Irvine, Conference on Political Economy. B. Grofman and G. Owen, Eds., Greenwich, CT: JAI Press.
Bendor, J.B. (1985)Parallel Systems: Redundancy in Government. Berkeley, CA: University of California Press.
Carley, K.M. (1991), “Designing Organizational Structures to Cope with Communication Breakdowns: A Simulation Model”,Industrial Crisis Quarterly, 5, 19–57.
Carley, K.M. (1992), “Organizational Learning and Personnel Turnover,”Organization Science, 3(1), 20–46.
Cyert, R. and J. March (1963),A Behavioral Theory of the Firm. Engelwood Cliffs, NY: Prentice-Hall.
Condorcet, N.C. (1785),Essai sur l'Application de l'Analyse de Probabilite des Decisions Rendues a Pluralite des Voix. Paris.
Healy, A.F. and M. Kubovy (1981), “Probability Matching and the Formation of Conservative Decision Rules in a Numerical Analog of Signal Detection,”Journal of Experimental Psychology, Human Learning and Memory, 7 (September), 344–354.
Heimann, C.L. (1993), “Understanding the Challenger Disaster: Organizational Structure and the Design of Reliable Systems,”American Political Science Review, 87(2), 421–435.
Kalisetty, S.P., D.L. Kleinman, D. Serfaty, and E.E. Entin (1993), “Coordination in Hierarchical Information Processing Structures (CHIPS): Experiment and Modeling Framework,”Proceedings of the 1993 Symposium on Command and Control Research, National Defense University, Fort McNair, Washington, DC.
Landau, M. (1969), “Redundancy, Rationality and the Problem of Duplication and Overlap,”Public Administration Review, 29(4), 346–358.
LaPorte, T.R. and P.M. Consolini (1991), “Working in Practice But Not in Theory: Theoretical Challenges of High-Reliability Organizations,”Journal of Public Administration Research and Theory, 1(1), 19–47
Luce, R.D. (1963),Handbook of Mathematical Psychology. R.D. Luce, R.R. Bush, E. Galanter (Eds.), New York: Wiley.
Macmillan, N.A. and H.L. Kaplan (1985), “Detection Theory Analysis of Group Data: Estimating Sensitivity From Average Hit and False-Alarm Rates,”Psychological Bulletin, 98(1), 185–199.
Nitzan, S. and J. Paroush (1982), “Optimal Decision Rules in Uncertain Dichotomous Choice Situations,”International Economic Review, 23(2), 289–297.
Nitzan, S. and U. Procaccia (1986), “Optimal Voting Procedures for Profit Maximizing Firms,”Public Choice, 51(2), 191–208.
Papastavrou, J.D. (1990),Decentralized Decision Making in a Hypothesis Testing Environment. Technical Report: LIDS-TH-1974, Cambridge, MA: Laboratory for Information and Decision Systems, MIT.
Papastavrou, J.D. and M. Athans (1992), “On Optimal Distributed Detection Architectures in a Hypothesis Testing Environment,”IEEE Transactions on Automatic Control, AC-37(8), 1154–1169.
Pete, A., K.R. Pattipati, and D.L. Kleinman (1993a), “Optimal Team and Individual Decision Rules in Uncertain Dichotomous Situations,”Public Choice, 75, 205–230.
Pete, A., K.R. Pattipati, and D.L. Kleinman (1993b), “Distributed Detection in Teams with Partial Information: A Normative-Descriptive Model,”IEEE Transactions on Systems, Man, and Cybernetics, SMC-23(6), 1626–1648.
Pete, A., K.R. Pattipati, and D.L. Kleinman (1993c), “Tasks and Organizations: A Signal Detection Model of Organizational Decisionmaking,”International Journal of Intelligent Systems in Accounting Finance and Management, 2, 289–303.
Pete, A., K.R. Pattipati, and D.L. Kleinman (1994), “Optimization of Detection Networks with Multiple Event Structures,”IEEE Transactions on Automatic Control, AC-39, 1702–1707.
Pete, A., K.R. Pattipati, and D.L. Kleinman (1995a), “Optimization of Decision Networks in Structured Task Environments,” submitted for publication toIEEE Transactions on Systems, Man, and Cybernetics, 1995.
Pete, A., K.R. Pattipati, and D.L. Kleinman (1995b), “Designing Organizations with Congruent Structures,”Proceedings of the 1995 First International Symposium on Command and Control Research and Technology, SAIC, McLean, VA.
Pete, A., D.L. Kleinman, and P.W. Young (1995), “Organizational Performance of Human Teams in a Structured Task Environment,”Proceedings of the 1995 First International Symposium on Command and Control Research and Technology, SAIC, McLean, VA.
Peterson, W.W., T.G. Birdsall, and W.C. Fox (1954), “The Theory of Signal Detectability,”Transactions of IRE Professional Group Information Theory, PGIT-4, 171–212.
Pressman, J.L. and A. Wildavsky (1973),Implementation. Berkeley, CA: University of California Press.
Reibman, A. and L.W. Nolte (1987a), “Optimal Detection and Performance of Distributed Sensor Systems,”IEEE Transactions on Aerospace and Electronic Systems, AES-23, 24–30.
Reibman, A. and L.W. Nolte (1987b), “Design and Performance Comparison of Distributed Detection Networks,”IEEE Transactions on Aerospace and Electronic Systems, AES-23, 789–797.
Rochlin, G.I., T.R. LaPorte, and K.H. Roberts (1987), “The Self-Designing High-Reliability Organization: Aircraft Carrier Flight Operations at Sea,”Naval War College Review, Autumn, 76–90.
Shapley, L. and B. Grofman (1984), “Optimizing Group Judgmental Accuracy in the Presence of Interdependencies,”Public Choice, 43, 329–343.
Swets, J.A. (1973), “The Relative Operating Characteristic in Psychology.”Science. 182(7), 990–1000.
Swets, J.A. (1986), “Indices of discrimination or Diagnostic Accuracy: Their ROCs and Implied Models,”Psychological Bulletin, 99(1), 100–117.
Swets, J.A. (1988), “Measuring the Accuracy of Diagnostic Systems,”Science, 240(3), 1285–1293.
Tang, Z.B., K.R. Pattipati, and D.L. Kleinman (1991), “An Algorithm for Determining the Decision Thresholds in a Distributed Detection Problem,”IEEE Transactions on Systems, Man and Cybernetics, SMC-21(1), 231–237.
Tang, Z.B., K.R. Pattipati, and D.L. Kleinman (1993), “Optimization of Distributed Detection Networks: Part II. Generalized Tree Structures,”IEEE Transactions on Systems, Man, and Cybernetics, SMC-23(1), 211–221.
Tanner, W.P. Jr. and J.A. Swets (1954), “The Human Use of Information,”Transactions of IRE Professional Group Information Theory, PGIT-4, 213–221.
Tenney, R.R. and N.R. Sandell Jr. (1981), “Detection with Distributed Sensors,”IEEE Transactions on Aerospace and Electronic Systems, AES-17, 501–510.
Van Meter, D. and D. Middleton (1954), “Modern Statistical Approaches to Reception in Communication Theory,”Transactions of IRE Professional Group Information Theory, PGIT-4, 119–141.
Van Trees, H.L. (1968),Detection, Estimation, and Modulation Theory, Vol. I. New York: John Wiley & Sons.
Wald, A. (1950),Statistical Decision Functions. New York: Wiley.
Author information
Authors and Affiliations
Additional information
This work was supported by the Office of Naval Research under ONR contract #N0014-93-I-0793.
Rights and permissions
About this article
Cite this article
Pete, A., Pattipati, K.R. & Kleinman, D.L. Structural reconfiguration and informal coordination in administrative organizations. Comput Math Organiz Theor 1, 93–116 (1995). https://doi.org/10.1007/BF01307830
Issue Date:
DOI: https://doi.org/10.1007/BF01307830