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Quadratic Teams, Information Economics, and Aggregate Planning Decisions

Charles H. Kriebel

Abstract

The construct of team decision theory developed by J. Marschak and R. Radner provides a useful framework for the conceptualization and evaluation of information within organizations. Quadratic teams concern team decision problems where the organizational objective criterion is represented by a quadratic function of the action and state variables. The purpose of this paper is to explicitly relate the analysis of quadratic team decision problems to recent research on optimal decision rules for aggregate planning--for example, as reported by Holt et al [5], Theil [9], van de Panne [10], and others. A numerical example is presented based on the well known microeconomic model of production and employment scheduling in a paint factory.