IDEAS home Printed from https://ideas.repec.org/p/wrk/wcreta/44.html
   My bibliography  Save this paper

Designing Communication Hierarchies

Author

Listed:
  • Migrow, Dimitri

    (University of Calgary)

Abstract

A manager aims to elicit employees’ information by designing a hierarchical communication network. She decides who communicates with whom, and in which order, where communication takes the form of “cheap talk” (Crawford and Sobel, 1982) and the information structure is beta-binomial. The optimal network is shaped by two competing forces: an intermediation force that calls for grouping employees together and an uncertainty force that favours separating them. The manager optimally divides employees into groups of similar bias. Under simple conditions on biases and a uniform prior, the optimal network features a single intermediary who communicates directly to the manager JEL classification numbers: C72 ;D82 ; D83

Suggested Citation

  • Migrow, Dimitri, 2018. "Designing Communication Hierarchies," CRETA Online Discussion Paper Series 44, Centre for Research in Economic Theory and its Applications CRETA.
    • Handle: RePEc:wrk:wcreta:44
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/creta/papers/manage/creta44_-_dimitri_migrow.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jeanne Hagenbach & Frédéric Koessler, 2010. "Strategic Communication Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(3), pages 1072-1099.
    2. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-727, September.
    3. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 809-839.
    4. Timothy Zandt, 1999. "Decentralized Information Processing in the Theory of Organizations," International Economic Association Series, in: Murat R. Sertel (ed.), Contemporary Economic Issues, chapter 7, pages 125-160, Palgrave Macmillan.
    5. Mylovanov, Tymofiy & Zapechelnyuk, Andriy, 2013. "Decision rules revealing commonly known events," Economics Letters, Elsevier, vol. 119(1), pages 8-10.
    6. Wouter Dessein, 2002. "Authority and Communication in Organizations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 811-838.
    7. Heikki Rantakari, 2008. "Governing Adaptation -super-1," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(4), pages 1257-1285.
    8. John Morgan & Phillip C. Stocken, 2008. "Information Aggregation in Polls," American Economic Review, American Economic Association, vol. 98(3), pages 864-896, June.
    9. Marco Battaglini, 2002. "Multiple Referrals and Multidimensional Cheap Talk," Econometrica, Econometric Society, vol. 70(4), pages 1379-1401, July.
    10. Ambrus, Attila & Lu, Shih En, 2014. "Almost fully revealing cheap talk with imperfectly informed senders," Games and Economic Behavior, Elsevier, vol. 88(C), pages 174-189.
    11. 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.
    12. Manju K. Ahuja & Kathleen M. Carley, 1999. "Network Structure in Virtual Organizations," Organization Science, INFORMS, vol. 10(6), pages 741-757, December.
    13. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
    14. Guido Friebel & Michael Raith, 2004. "Abuse of Authority and Hierarchical Communication," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 224-244, Summer.
    15. Ivanov, Maxim, 2010. "Communication via a strategic mediator," Journal of Economic Theory, Elsevier, vol. 145(2), pages 869-884, March.
    16. Galeotti, Andrea & Ghiglino, Christian & Squintani, Francesco, 2013. "Strategic information transmission networks," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1751-1769.
    17. , & , M. & ,, 2013. "Hierarchical cheap talk," Theoretical Economics, Econometric Society, vol. 8(1), January.
    18. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    19. Steven R. Grenadier & Andrey Malenko & Nadya Malenko, 2016. "Timing Decisions in Organizations: Communication and Authority in a Dynamic Environment," American Economic Review, American Economic Association, vol. 106(9), pages 2552-2581, September.
    20. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-1146, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Migrow, Dimitri, 2021. "Designing communication hierarchies," Journal of Economic Theory, Elsevier, vol. 198(C).
    2. Kakhbod, Ali & Loginova, Uliana, 2023. "When does introducing verifiable communication choices improve welfare?," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 139-162.
    3. Pinghan Liang, 2010. "Transfer of Authority within Hierarchy," Levine's Working Paper Archive 661465000000000139, David K. Levine.
    4. , & , M. & ,, 2013. "Hierarchical cheap talk," Theoretical Economics, Econometric Society, vol. 8(1), January.
    5. Galeotti, Andrea & Ghiglino, Christian & Squintani, Francesco, 2009. "Strategic Information Transmission in Networks," Economics Discussion Papers 2974, University of Essex, Department of Economics.
    6. Li, Zhuozheng & Rantakari, Heikki & Yang, Huanxing, 2016. "Competitive cheap talk," Games and Economic Behavior, Elsevier, vol. 96(C), pages 65-89.
    7. Liang, Pinghan, 2013. "Optimal delegation via a strategic intermediary," Games and Economic Behavior, Elsevier, vol. 82(C), pages 15-30.
    8. Daniel Habermacher, 2022. "Authority and Specialization under Informational Interdependence," Working Papers 142, Red Nacional de Investigadores en Economía (RedNIE).
    9. 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.
    10. Hagenbach, Jeanne & Koessler, Frédéric, 2016. "Full disclosure in decentralized organizations," Economics Letters, Elsevier, vol. 139(C), pages 5-7.
    11. McGee, Andrew & Yang, Huanxing, 2013. "Cheap talk with two senders and complementary information," Games and Economic Behavior, Elsevier, vol. 79(C), pages 181-191.
    12. Dmitry Sedov, 2023. "Almost-truthful interim-biased mediation enables information exchange between agents with misaligned interests," Review of Economic Design, Springer;Society for Economic Design, vol. 27(3), pages 505-546, September.
    13. Ambrus, Attila & Lu, Shih En, 2014. "Almost fully revealing cheap talk with imperfectly informed senders," Games and Economic Behavior, Elsevier, vol. 88(C), pages 174-189.
    14. Hiromasa Ogawa, 2021. "Receiver’s sensitivity and strategic information transmission in multi-sender cheap talk," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(1), pages 215-239, March.
    15. Pinghan Liang, 2017. "Transfer of authority within hierarchies," Review of Economic Design, Springer;Society for Economic Design, vol. 21(4), pages 273-290, December.
    16. Foerster, Manuel, 2019. "Dynamics of strategic information transmission in social networks," Theoretical Economics, Econometric Society, vol. 14(1), January.
    17. Lu, Shih En, 2017. "Coordination-free equilibria in cheap talk games," Journal of Economic Theory, Elsevier, vol. 168(C), pages 177-208.
    18. Pérez, Jessica Helen & Iranzo Sancho, Susana, 2012. "Determinants of Decentralization within the Firm: Some Empirical Evidence from Spanish Small and Medium- Sized Enterprise," Working Papers 2072/211755, Universitat Rovira i Virgili, Department of Economics.
    19. Shen, Jim Huangnan & Zhang, Jun & Lee, Chien-Chiang & Li, Weiping, 2020. "Toward an internal governance structure of China’s large SOEs," Journal of Asian Economics, Elsevier, vol. 70(C).
    20. Rivera, Thomas J., 2018. "Incentives and the structure of communication," Journal of Economic Theory, Elsevier, vol. 175(C), pages 201-247.

    More about this item

    Keywords

    organizational design ; strategic communication ; informationaggregation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wrk:wcreta:44. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Margaret Nash (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.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.