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MTWP Lunchtime Workshop - Daniel Habermacher (PGR-Warwick)

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Location: S1.50

Organiser: Ayush Pant

Paper Title: “Authority and Information Acquisition in Cheap Talk with Informational Interdependence”

Abstract: “I study a two-dimensional, multi-sender cheap talk game with interdependent decisions. The Principal can delegate authority over any decision, and thus affect incentives for communication. Delegation is optimal if the expected informational gains outweighs the loss of control due to a biased decision. Because delegation breaks the interdependence, communication incentives relates to decision-specific conflict of interest. Informational gains could arise because the agent’s preferences are `more central' than the Principal’s in the corresponding dimension; but they could also involve the Principal receiving more information when she retains authority over one decision (Partial Delegation).

I also analyse the case of costly information acquisition. An agent will invest in information if and only if the expected utility gains from revealing it compensate its costs. For this to be true, truthful communication must be incentive compatible and his marginal influence sufficiently large; that is, few other agents acquire (and reveal) the same information in equilibrium. This implies there exists cost values above which centralization is strictly optimal for the Principal.”

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