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Information Acquisition, Referral, and Organization

Author

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  • Simona Grassi

    () (Universite de Lausanne)

  • Ching-To Albert Ma

    () (Boston University)

Abstract

Each of two experts may provide a service to a client. Experts' cost comparative advantage depends on an unknown state, but an expert may exert effort to get a private signal about it. In a market, an expert may refer the client to the other for a fee. In equilibrium, only one expert exerts e§ort and refers, and the equilibrium allocation is ine¢ cient. Referral efficiency can be restored when experts form an organization, in which a referring expert must bear the referred expert's cost. However, the referred expert shirks from work effort because of the lack of cost responsibility.

Suggested Citation

  • Simona Grassi & Ching-To Albert Ma, 2015. "Information Acquisition, Referral, and Organization," Boston University - Department of Economics - Working Papers Series wp2015-007, Boston University - Department of Economics.
  • Handle: RePEc:bos:wpaper:wp2015-007
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    References listed on IDEAS

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    1. repec:eee:ecanpo:v:58:y:2018:i:c:p:121-130 is not listed on IDEAS
    2. repec:eee:ejores:v:264:y:2018:i:1:p:327-339 is not listed on IDEAS
    3. repec:eee:enepol:v:109:y:2017:i:c:p:400-413 is not listed on IDEAS
    4. Lange, Juliane & Stahl, Florian & Vossen, Gottfried, 2016. "Datenmarktplätze in verschiedenen Forschungsdisziplinen: Eine Übersicht," Arbeitsberichte des Instituts für Wirtschaftsinformatik 138, University of Münster, Department of Information Systems.

    More about this item

    Keywords

    information acquisition; referral; organization; adverse selection; cost-reduction incentive;

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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