The paper gives an outline of a theory on hierarchical organizational planning. Hierarchies for one and more than one decision maker are discussed and characterized by a team or non-team relationship. The internal structure of a hierarchy is described by a pair of functional equations giving rise to a formal treatment of constructional organizational, and principal agent hierarchies. In particular, the prominent types of a top-down and a tactical-operational hierarchy are investigated, which allows the representation of numerous practical situations. Specific emphasis is laid on the ability of hierarchical decision making to provide a theoretical foundation for various essential concepts in business administration, like cost accounting of organizational design.
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