The Garbling Decision Maker: A Model of Bounded Rationality.
Abstract
A model is constructed of a garbling decision maker -- one who garbles his decision in response to the quantity of information he uses to reach his decision. This model is supposed to capture some of the effects of bounded rationality on decision making. This model of the decision maker is imbedded in a team-model of an organization to model the organization designer's problem. A Linear-Quadratic-Gaussian static team formulation is given and a separation result is proven that shows that the form of the problem reduced to the usual formulation of adding the cost of organization to the team objective, giving a new interpretation to the traditional formulation. While this result is uninteresting generally and is an artifact of the quadratic payoff, it may be used to show constant informational returns to scale in a case were a more usual cost of information yields increasing informational returns to scale. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- May 01, 1979
- Accession Number
- ADA072522
Entities
People
- Nicholas Papadopoulos
Organizations
- Harvard University