Organizing Data Analytics
Management Science · 2024 · Volume 70 · Issue 5
Abstract
We develop a theory of credible skepticism in organizations to explain the main tradeoffs in organizing data generation, analysis, and reporting. In our designer-agent-principal game, the designer selects the information privately observed by the agent who can misreport it at a cost, whereas the principal can audit the report. We study three organizational levers: tampering prevention, tampering detection, and the allocation of the experimental-design task. We show that motivating informative experimentation while discouraging misreporting are often conflicting organizational goals. To incentivize experimentation, the principal foregoes a flawless tampering detection/prevention system and separates the tasks of experimental design and analysis. This paper was accepted by Alfonso Gambardella, business strategy. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.00207 .
Keywords
strategic experimentation, Bayesian persuasion, tampering, organizational design, information technology, audit
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