IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20260047.html

Leveraging private information when interests diverge: An experimental comparison of communication versus restricted delegation

Author

Listed:
  • Silvia Dominguez-Martinez

    (University of Amsterdam)

  • Randolph Sloof

    (University of Amsterdam)

Abstract

This paper investigates how managers choose between communication and delegation when informed workers may have different objectives. We study a laboratory principal-agent environment in which only the worker observes the payoff-relevant state of the world. In three equally likely states, preferences are aligned; in a fourth state, preferences are opposed. The ex ante degree of interest alignment is exogenously varied via the likelihood that the conflict state occurs. We allow managers either to retain authority, delegate authority, or restrict the worker’s discretion under delegation. We find that the manager’s choice between communication and delegation per se exhibits no significant monotone relationship with interest alignment, but conditional on delegation managers impose tighter restrictions when interests become less aligned. Under communication, workers almost always communicate truthfully when interests are aligned, but distort information when interests conflict; overall, messages become more informative and influential as ex ante interest alignment increases. The comparison with equilibrium benchmarks is nuanced: communication is more informative than the pure-strategy benchmarks predict, while the mixed-strategy equilibrium benchmark accounts for part of the observed aggregate pattern. The remaining communication patterns are qualitatively consistent with limited behavioral heterogeneity, especially a modest role for credulous managers, suggesting that small departures from the fully strategic benchmark may help sustain informative communication even when workers remain largely strategic. Overall, managers often retain authority and rely on communication; when they delegate, restrictions increase as interests become less aligned. Communication remains viable because workers distort information mainly when interests actually conflict.

Suggested Citation

  • Silvia Dominguez-Martinez & Randolph Sloof, 2026. "Leveraging private information when interests diverge: An experimental comparison of communication versus restricted delegation," Tinbergen Institute Discussion Papers 26-047/VII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20260047
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/26047.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20260047. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.