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Strategic Information Acquisition and Transmission

Listed author(s):
  • Rossella Argenziano
  • Sergei Severinov
  • Francesco Squintani

This paper explores the implications of costly information acquisition in a strategic communication setting. We show that equilibrium decisions based on a biased expert's advice may be more precise than when information is directly acquired by the decision maker, even if the expert is not more efficient than the decision maker at acquiring information. This result bears important implications for organization design. Communication by an expert to a decision maker may often outperform delegation of the decision-making authority to the expert, as well as centralization by the decision maker of both information acquisition and decision-making authority.

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File URL: https://www.aeaweb.org/articles?id=10.1257/mic.20140135
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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 8 (2016)
Issue (Month): 3 (August)
Pages: 119-155

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Handle: RePEc:aea:aejmic:v:8:y:2016:i:3:p:119-55
Note: DOI: 10.1257/mic.20140135
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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  1. Yeon-Koo Che & Navin Kartik, 2009. "Opinions as Incentives," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 815-860, October.
  2. Gilligan, Thomas W & Krehbiel, Keith, 1987. "Collective Decisionmaking and Standing Committees: An Informational Rationale for Restrictive Amendment Procedures," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 287-335, Fall.
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  8. Thomas N. Hubbard, 2009. "Specialization, Firms, and Markets: The Division of Labor within and between Law Firms," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(2), pages 339-371, October.
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  10. ., 1994. "Firm, Boundaries of the," Chapters,in: The Elgar Companion to Institutional and Evolutionary Economics, chapter 43 Edward Elgar Publishing.
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  12. Wolinsky, Asher, 2002. "Eliciting information from multiple experts," Games and Economic Behavior, Elsevier, vol. 41(1), pages 141-160, October.
  13. anonymous, 1994. "Research confirms rationality of analysts' forecasts," Economics Update, Federal Reserve Bank of Atlanta, issue Apr, pages 1-2.
  14. Pei, Harry Di, 2015. "Communication with endogenous information acquisition," Journal of Economic Theory, Elsevier, vol. 160(C), pages 132-149.
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  18. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 809-839.
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