Efficient Hierarchies: Equivalence Under Differing Employment Regimes.

A major criticism of the information processing hierarchy model of management structure pioneered by Radner and Van Zandt is that it is unrealistic in its description of labor. This paper shows how the existing model can be extende to use labor hours instead of just the number of people employed. This allows the analysis of hierarchies to include realistic employment regimes such as salaries and piece rates. The sets of efficient hierarchies under these new, more realistic employment regimes are derived.