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Information Sharing And Incentives In Organizations

Author

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  • Jean-Etienne de Bettignies

    (Queen's University)

  • Jan Zabojnik

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 information 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 information 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

  • Jean-Etienne de Bettignies & Jan Zabojnik, 2013. "Information Sharing And Incentives In Organizations," Working Paper 1321, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1321
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1321.pdf
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    References listed on IDEAS

    as
    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.
    2. Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008. "When Does Coordination Require Centralization?," American Economic Review, American Economic Association, vol. 98(1), pages 145-179, March.
    3. 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.
    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. repec:ner:ucllon:http://discovery.ucl.ac.uk/17678/ is not listed on IDEAS
    7. 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.
    8. Gromb, Denis & Martimort, David, 2007. "Collusion and the organization of delegated expertise," Journal of Economic Theory, Elsevier, vol. 137(1), pages 271-299, November.
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    Cited by:

    1. Catonini, Emiliano & Stepanov, Sergey, 2023. "Reputation and information aggregation," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 156-173.
    2. Mehdi Shadmehr & Dan Bernhardt, 2015. "State Censorship," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 280-307, May.
    3. 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

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    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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