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On Transparency in Organizations

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  • Philippe Jehiel

Abstract

When is it best for the Principal to commit to not disclosing all that he/she knows in moral hazard interactions? I show that whenever the Agent would choose the same action under complete information at several distinct states, then full transparency can generically be improved upon. This implies that full transparency is generically suboptimal whenever the dimension of the information held by the Principal exceeds the dimension of the Agent's action. In a simple class of problems, I make further progress on the best disclosure policy assuming the Principal can either disclose fully the state or remain silent.
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Suggested Citation

  • Philippe Jehiel, 2010. "On Transparency in Organizations," Levine's Bibliography 661465000000000180, UCLA Department of Economics.
    • Handle: RePEc:cla:levrem:661465000000000180
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    References listed on IDEAS

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    1. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-343, March.
    2. Abreu, Dilip & Milgrom, Paul & Pearce, David, 1991. "Information and Timing in Repeated Partnerships," Econometrica, Econometric Society, vol. 59(6), pages 1713-1733, November.
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    Cited by:

    1. Bassetto, Marco, 2019. "Forward guidance: Communication, commitment, or both?," Journal of Monetary Economics, Elsevier, vol. 108(C), pages 69-86.
    2. Anton Kolotilin & Hongyi, 2018. "Relational Communication," Discussion Papers 2018-12, School of Economics, The University of New South Wales.
    3. Philippe Jehiel, 2022. "Analogy-Based Expectation Equilibrium and Related Concepts:Theory, Applications, and Beyond," Working Papers halshs-03735680, HAL.
    4. Fujiwara, Ippei & Waki, Yuichiro, 2020. "Fiscal forward guidance: A case for selective transparency," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 236-248.
    5. Robert Dur & Heiner Schmittdiel, 2019. "Paid to Quit," De Economist, Springer, vol. 167(4), pages 387-406, December.
    6. Vanessa, Mertins & Jeworrek, Sabrina & Vlassopoulos, Michael, 2018. ""The Good News about Bad News": Feedback about Past Organisational Failure Bad ist Impact in Worker Productivity," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181644, Verein für Socialpolitik / German Economic Association.
    7. Ippei Fujiwara & Yuichiro Waki, 2022. "The Delphic forward guidance puzzle in New Keynesian models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 280-301, October.
    8. Bianchi, Milo & Jehiel, Philippe, 2015. "Financial reporting and market efficiency with extrapolative investors," Journal of Economic Theory, Elsevier, vol. 157(C), pages 842-878.
    9. Jens Butschan & Sven Heidenreich & Benjamin Weber & Tobias Kraemer, 2019. "TACKLING HURDLES TO DIGITAL TRANSFORMATION — THE ROLE OF COMPETENCIES FOR SUCCESSFUL INDUSTRIAL INTERNET OF THINGS (IIoT) IMPLEMENTATION," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(04), pages 1-34, May.
    10. Hao Li & Xianwen Shi, 2017. "Discriminatory Information Disclosure," American Economic Review, American Economic Association, vol. 107(11), pages 3363-3385, November.
    11. Brandes, Leif & Darai, Donja, 2017. "The value and motivating mechanism of transparency in organizations," European Economic Review, Elsevier, vol. 98(C), pages 189-198.
    12. Emiliano Catonini & Sergey Stepanov, 2022. "On the optimality of full disclosure," Papers 2202.07944, arXiv.org, revised Feb 2023.
    13. Balmaceda, Felipe, 2021. "Private vs. public communication: Difference of opinion and reputational concerns," Journal of Economic Theory, Elsevier, vol. 196(C).
    14. Eduard Alonso‐Pauli & Lluís Bru, 2020. "A note on the impact of the internal organization on the accuracy of the information transmitted within the firm," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 902-910, September.
    15. Ippei Fujiwara & Yuichiro Waki, 2022. "The Delphic forward guidance puzzle in New Keynesian models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 280-301, October.
    16. Negrelli, Sara, 2020. "Bubbles and persuasion with uncertainty over market sentiment," Games and Economic Behavior, Elsevier, vol. 120(C), pages 67-85.
    17. Jeworrek, Sabrina & Mertins, Vanessa & Vlassopoulos, Michael, 2018. ""The good news about bad news": Feedback about past organisational failure and its impact on worker productivity," IWH Discussion Papers 1/2018, Halle Institute for Economic Research (IWH).

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