When communicating with an uninformed decision maker, the motives behind an expert's message are often unclear. To explore this and investigate its impact on organizational design, we extend the cheap-talk model of Crawford and Sobel (1982) to allow for uncertainty over the expert's bias. We find that, in contrast to Dessein (2002), it is possible that the decision maker prefers communication to delegation; that is, it can be optimal for a decision maker to retain control and to solicit advice from the expert.
Ed. by Cervellati, Matteo / Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Schipper, Burkhard
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Communication Breakdown: Consultation or Delegation from an Expert with Uncertain Bias
1Reserve Bank of Australia, rusha@rba.gov.au
2University of Sydney, v.smirnov@econ.usyd.edu.au
3University of Sydney, a.wait@econ.usyd.edu.au
Citation Information: The B.E. Journal of Theoretical Economics. Volume 10, Issue 1, Pages –, ISSN (Online) 1935-1704, DOI: 10.2202/1935-1704.1612, August 2010
Publication History:
- Published Online:
- 2010-08-04
Keywords: delegation; communication; uncertainty; bias; cheap-talk model
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