Investment criteria in single and multi-member economic organizations

This paper compares the determination of investment criteria in single- and multi-member organizations. Individual decisional skills are assumed to be endogenous variables that depend on the investment criteria. Our main resu lt specifies the condition that determines the relationship between the inv estment criteria in single- and multi-member organizations, given the size of the multi-member organization, the decision rule it applies and the func tion relating the individual's decisional skills to the investment criterio n. The implications of our main result are developed for special organizati ons such as hierarchies and polyarchies. Our analysis implies that the crit eria in a multi-member organization may be stricter than the criteria set i n a single-member organization, even though in the former case the organiza tion may worsen the average decision-making ability of its members. The ana lysis can be applied not only in single and multi-member decision making se ttings, but also in some contexts of centralized and decentralized decision s. This is illustrated in the case of decisions by editors of professional journals regarding the acceptance or rejection of submitted papers.