Delegated Expertise, Authority, and Communication (joint with Dezsö Szalay) (2019) American Economic Review, 109 (4): 1349-74. A decision-maker needs to reach a decision and relies on an expert to acquire information. Ideal actions of expert and decision-maker are partially aligned and the expert chooses what to learn about each. The decision-maker can either get advice from the expert or delegate decision-making to him. Under delegation, the expert learns his privately optimal action and chooses it. Under communication, advice based on such information is discounted, resulting in losses from strategic communication. We characterize the communication problems that make the expert acquire information of equal use to expert and decision-maker. In these problems, communication outperforms delegation.
Information and Communication in Organizations (joint with Dezsö Szalay) (2019) AEA Papers and Proceedings, 109 : 545-49. We study a constrained information design problem in an organization. A designer chooses the information structure. A sender with preferences different from the decision-maker observes and processes the information before he communicates with the decision-maker. Information shapes conflicts within the organization: the optimal information structure essentially eliminates conflicts and serves as a substitute to the allocation of decision-making authority in the organization.
Consistency and Communication in Committees (joint with Felix Ketelaar and Mark T. Le Quement) (2015) Journal of Economic Theory, 160: 24 –35. We generalize the classical binary Condorcet jury model by introducing a richer state and signal space, thereby generating a concern for consistency in the evaluation of aggregate information. We analyze truth-telling incentives in simultaneous pre-vote communication in heterogeneous committees and find that full pooling of information followed by sincere voting is compatible with a positive probability of ex post conflict in the committee.
Information Processing: Contracts versus Communication (with Andreas Blume and Sean Inoue) We consider the trade-off between imperfect control and communication in organizations. A principal anticipates receiving private information and hires an agent to take an action for her. She has the ability to contractually tie the agent's action to the state, but this control is imperfect. Contracts prescribe a limited number of actions and are, therefore, incomplete. The principal may choose contracts that do not cover all states. States not covered by a contract induce a communication game in which the agent has discretion over the action. We find that optimal contracts always control the maximal feasible number of actions but need not cover all states. Close alignment of interests favors communicating and, thus, ceding authority to the agent, and vice versa. Contracting increases the number of actions that can be induced through communication. Optimal contracts that do not cover all states both substitute for and facilitate communication.
Cost, Control, and Confidence: Explaining Perseverance in the Face of Failure (with Julia Wirtz) We study perseverance and the development of control beliefs: a student is uncertain whether success can be controlled through effort or is determined by her innate ability, which she also does not know. In each period, what she can learn about her control and her ability depends on the level of effort she exerts. We characterize the student's optimal effort policy, which may feature repeated switching of the effort level. Moreover, we analyze how control, cost, and confidence impact perseverance. Finally, we relate our results to findings in psychology and propose policies to foster perseverance.
Work in Progress:
"Communication in Organizations: Conflicting versus Aligned Interests" (with Dezsö Szalay) We study the interaction between an alliance management and two strategic partners in a joint venture. The alliance management commits resources to determine the research strategy. The first partner is specialized in conducting research. He interprets the available information and advises the second partner, who is specialized in developing the product. Our model combines elements of information design with the strategic transmission of information. We identify two crucial factors for information transmission within the venture: the relative strength of the venture partners and the nature of the uncertainty the venture faces. While imbalance generates conflicts, uncertainty moderates and favors aligned interests.
"Advice from an overconfident sender" (with Dezsö Szalay)
"Communication in the Shadow of Limited Commitment" (with Andreas Blume)