The organization of expertise in the presence of communication
AbstractA decision-maker has to elicit information from informed multiple experts about a policy's value. The principal may prevent communication among the agents. However, it may be in the principal's interest to allow communication among them. I assume that communication allows synergies to emerge among the experts but also opens the possibility of collusion among them. I study the optimal design of contracts, focusing on the organization of expertise in the communication phase. I show that, from the principal's point of view, when the advantage of synergies prevails over the collusion problem, communication dominates the no communication case. However, synergies will always prevail if the principal lets agents communicate with each other before they make their choices rather than after.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/835.
Length: 24 pages
Date of creation: 09 Nov 2009
Date of revision:
information acquisition; communication; coordination; collusion; expertise; organization;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-20 (All new papers)
- NEP-CDM-2010-02-20 (Collective Decision-Making)
- NEP-CTA-2010-02-20 (Contract Theory & Applications)
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