Information Sharing and Incentives in Organizations
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.
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- Philippe Aghion & Jean Tirole, 1994.
"Normal and Real Authority in Organizations,"
94-13, Massachusetts Institute of Technology (MIT), Department of Economics.
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- 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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