Problem Solving by Teams of Heterogeneous Agents
Scott Page
Dept of Economics
California Institute of Technology
co-author: Lu Hong
Dept. of Economics
Syracuse University
12:05 pm Wed. Nov. 29 in 5134 Chamberlin Hall
We construct a model of problem solving by teams of
heterogeneous agents with limited ability which elucidates differences
between problem solving firms and manufacturing firms. The heterogeneity
refers to differences in how individual problem solvers perceive problems
and in how they attempt to solve them. These differences enable teams of
problem solvers to outperform individuals. In applying this model of
heterogeneous problem solvers to production theory, we arrive at some
uncomfortable conclusions: among them that arbitrary returns to additional
problem solvers are possible and that a team of people of ``equal ability''
applied to a single problem might exhibit increasing returns or decreasing
returns depending upon the order they are hired. We can formulate
assumptions which generate decreasing returns, but they rely on such
pessimistic assessments of the abilities of problem solvers so as to be
unrealistic.