Even More Decentralisation

Minimizing adaptation costs
 * Communication between decentralised units is good

Knowledge specialisation
 * Epistemological knowledge is justified true belief. Two types: Explicit knowledge, Tacit knowledge.
 * Other type of knowledge is practical knowledge which is knowledge used to solve problems.
 * Explicit knowledge is knowledge that can be recorded and replicated and understood/communicated easily by others.
 * Tacit knowledge is knowledge that is hard to put in words, difficult to transfer, comes from experience.
 * A model of knowledge acquisition is needed
 * Pr(z<=x) = 2x - x^2 (cos Pr is probability geddit?)
 * z is the problem variable
 * [0,x] is the time period and 2x - x^2 is the probability that the worker will face the problem
 * The likelihood of getting a problem similar to above is the differentiation of the Pr function
 * If individual knows how to solve z=x, they can solve problems for z 2 - 2zi -2czi = 0 and thus z = 1/(c+1)
 * This is the optimal amount of knowledge to learn/gain in this case.

Horzontal knowledge specialisation
 * Assuming knowledge is easily written, transferred, explicit, accesible and costless to transfer.
 * For this case, non-overlapping knowledge is preferred because knowledge transfer is costless
 * For cumulative knowledge in an organisation, only one member specializes in knowledge acquisition
 * For loosely-coupled knowledge in an organisation, have several independent experts

Vertical knowledge specialisation
 * For the case when knowledge is tacit instead of explicit.
 * Islands of knowledge. Workers all have the same knowledge base. They become self sufficient.
 * Knowledge hierarchies. Workers refer to other workers problems they can't solve. Using manager's knowledge expensive as it is costly to communicate. Reduces communication as a result.
 * Workers have to gain more knowledge if communication is costly and when knowledge of worker increases, communication costs will lessen.
 * Referring problems to managers by workers increases knowledge for both parties leading to vertical complimentarity.