More Decentralisation

Allocating DM authority
 * Centralisation and Delegation
 * Decentralising is a way to get lower level managers engaged in decision making
 * Workers may have more information but not the best decision-making skills for the organisation due to: externalities, private agendas, private benefits from organisation
 * Question solving
 * it is all about comparing expected profits calculated from probabilities
 * use probabilities of different scenarios occuring to calculate expected profits
 * make E(profit) = 0 to find conditions for action/inaction
 * compare action outcomes to inaction outcomes to see what are the conditions for action
 * compare loss (my ideal action) - (my actual action given the probablities)
 * compare outcomes of centralisation to decentralisation to find out how different alignments affect profits
 * Constrained Delegation: Delegating Price Decisions
 * Workers are given decisions they can make but are also given restrictions
 * They can only make decisions on certain aspects of the organisation
 * Question solving:
 * same as the above but there are options for the worker to take but the worker is only allowed some/one of the options of action

Fostering Communication
 * Communication is key in decentralisation as it coordinates individually motivated workers from overlapping on tasks and other inefficiencies
 * But communication can be difficult and it may not solve all coordination problems
 * Credulousness
 * central management may or may not trust the information given to them by workers
 * central management may need to know about personal biases of workers to accurately judge information
 * depends heavily on whether worker goals and organisation goals align
 * Communication can break down if CEO is aware of personal agendas
 * information distortion is a high possibility
 * need to reduce internal conflict
 * Communication costs
 * Technology, more frequent meetings, regulation, etc all costly
 * Incentivising information sharing is also costly
 * Not trusting the information given can also be costly
 * Incentives to share information
 * Communication causes externalities so workers share less info
 * We have to motivate instead of only enabling
 * Need incentivisation