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Information Sharing and Incentives in Organizations

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  • de Bettignies, Jean-Etienne
  • Zabojnik, Jan

Abstract

We examine optimal information flows between a manager and a worker who is in charge of evaluating a parameter of interest, e.g. the value of a project. The manager may possesses information about the parameter, and, if informed, may divulge her in- formation to the worker. We show that information sharing may weaken the worker's incentives and that, consequently, the manager may find it optimal to conceal her in- formation from the worker. Moreover, the manager faces a time-inconsistency problem, which leads her to conceal her information more often than she would if she could commit to an information sharing policy. We build on these results to address issues related to authority in organizations.

Suggested Citation

  • de Bettignies, Jean-Etienne & Zabojnik, Jan, 2013. "Information Sharing and Incentives in Organizations," Queen's Economics Department Working Papers 274646, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:274646
    DOI: 10.22004/ag.econ.274646
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    References listed on IDEAS

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    1. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
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    4. Malcomson James M, 2009. "Principal and Expert Agent," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-36, May.
    5. Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008. "When Does Coordination Require Centralization? Corrigendum," American Economic Review, American Economic Association, vol. 98(3), pages 1195-1196, June.
    6. Jan Zabojnik, 2002. "Centralized and Decentralized Decision Making in Organizations," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 1-22, January.
    7. Richard A. Lambert, 1986. "Executive Effort and Selection of Risky Projects," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 77-88, Spring.
    8. Steven D. Levitt & Christopher M. Snyder, 1997. "Is No. News Bad News? Information Transmission and the Role of "Early Warning" in the Principal-Agent Model," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 641-661, Winter.
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    2. Catonini, Emiliano & Stepanov, Sergey, 2023. "Reputation and information aggregation," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 156-173.
    3. Mehdi Shadmehr & Dan Bernhardt, 2015. "State Censorship," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 280-307, May.
    4. Hideshi Itoh & Kimiyuki Morita, 2023. "Information Acquisition, Decision Making, and Implementation in Organizations," Management Science, INFORMS, vol. 69(1), pages 446-463, January.

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    More about this item

    Keywords

    ;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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