Information Signal Quality and Risky Project Evaluation in Organizations (Environment, Adoptability and Choice–Hierarchies and Polyarchies)

Akin Seber


In this paper, risky project evaluation in organizations is modelled in a linear information signal framework, which enables the following multidimensional analysis: “Ability”–Agents may have different abilities in processing information for risky project evaluation; “Endogenity”–It is possible to choose the organization type internally, or the organization type may be determined externally by the environment, in which case it is necessary for the evaluation criteria to adopt to the environment; “Sensitivity”–Risky and risk-free alternatives may not necessarily be equal with positive risk sensitivity and positive price of risk; “Project Quality”–The project quality may always be a certain type, for example, fixed (below or above average all the time) or it may be variable, which may affect the evaluation criteria; “Communication”–Communication between the agents may be in an information quality improving or detoriorating manner; “Coordination”–There may be an existance problem for the organization (it may exist due to an external setup, or from internal dynamics), and there may be a need for coordination between the agents in case it exists with internal dynamics. Risky project evaluation in organizations with a specific information signal quality has not been analyzed in the literature before and is a contribution of this paper. As a result of the analysis, most of the multidimensional variables mentioned in organizational decision making are original and specific to our paper. The results of the analysis have policy implications in all types of organizational settings of collective decision-making environments like family, firm, government, education, military, politics, and economic systems.

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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