Research

WORKING PAPERS

Authority and Specialization under Informational Interdependence

Abstract: A firm must adapt the design of two products to costly information about two attributes, which is only available to external agents. A manager controls one product, while the headquarters decides who controls the other: either she retains authority or centralizes both decisions on the manager. Authority and interdependence interact to shape agents' incentives. We find that the firm benefits from specialization --i.e. an agent observing information about one attribute- when it reduces profitable deviations from truthful communication. Besides, agents may acquire information they know will not be used in some cases because it leads to full revelation in other cases. We show interdependence can lead to positive and negative informational spillovers that affect communication incentives and, thus, the optimal allocation of authority. Finally, decision-makers are expected to lose perspective under split authority: agents' failure to internalize the interdependence leads to suboptimal acquisition of information.

Policy-advising Competition and Endogenous Lobbies (with Manuel Foerster)

Abstract: We investigate Bertrand competition between experts with different motives for access to a policy-maker. The policy-maker has to implement a policy and can either acquire information himself or hire a biased but well-informed expert. We show that the expert charges a fee if policy preferences are roughly aligned. Otherwise, she pays contributions in order to get the decision delegated --and thus acts as a lobbyist instead of as an advisor-- if policy is sufficiently important to her. We then introduce competition from an unbiased career-concerned expert and show that lobbying may occur because of competition. Finally, we determine conditions under which the hiring decision (competition) leads to lower social welfare. Interestingly, hiring (competition from) a good advisor may decrease social welfare if the policy issue is narrow and mainly concerns the policy-maker's own voters.

Information Aggregation in Multidimensional Cheap Talk (new version coming soon)

Abstract: I examine a cheap talk game with multiple interdependent decisions, in which biased senders privately observe information about payoff-relevant states. I find that senders are willing to use open (state-specific) communication channels to strategically convey information about other states that otherwise cannot be revealed. In equilibrium, this leads to a loss of credibility that reduces the set of parameters for which communication is incentive compatible. The credibility loss associated with a sender arises when a given piece of information is relevant for both low- and high-conflict decisions. Surprisingly, when the receiver is expected to observe more of such information on path, the associated credibility loss recedes---i.e. the sender is more willing to reveal information that is only relevant for low-conflict decisions. Finally, I fully characterize communication equilibria in a simple version of the model, which I later use as a baseline to analyze the interaction between informational interdependence and preferences for coordinated decisions.

WORK IN PROGRESS

Organizational Design and the Acquisition of Imperfect Information (with Manuel Foerster)