Returns to Scale in One-Shot Information Processing When Hours Count.

As the modern firm has grown in siza and complecity, more and more attention has focused on how to organize it efficiently. The theory of the firm (and contract theory) examines efficiency-enhancing corporate policies, such as policies to induce high effort, innovation and cooperation among workers. Hierarche theory seeks to rectify the omission of information-related costs. Increasing returns in information processing would tend to imply that firms with large informational needs would 'over-process', that is, gather and process information that yields diminishing marginal benefits.