The Architecture of Economic Systems: Hierarchies and Polyarchies

Stiglitz, Joseph E.; Sah, Raaj Kumar

This paper presents some new ways of looking at economic systems and organizations. Individuals' judgments entail errors; they sometimes reject good projects and accept bad projects (or ideas). The architecture of an economic system (i.e., how the decision-making units are organized together within a system, who gathers what information, and who communicates what with whom) affects the errors made by individuals within the system, as well as how those errors are aggregated.



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American Economic Review

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April 29, 2013