In a diffusion model of an enterprise with variable scale, sufficientconditions are given for the maximization of expected profit (expectedtotal discounted withdrawals) to lead to eventual bankruptcy with probabilityone. The optimal withdrawal policy is an quot;overflow policy,quot; in which the...

We study the properties of real-time decentralized information processing, as a model of human information processing in organizations, and use the model to understand how constraints on human information processing affect the returns to scale of firms. With real-time processing,...

We use a model of real-time decentralized information processing to understand howconstraints on human information processing affect the returns to scale of organizations.We identify three informational (dis)economies of scale: diversification of heterogeneousrisks (positive), sharing of...