Accept or reject? An organizational perspective

Umberto Garfagnini, Marco Ottaviani and Peter Sørensen

International Journal of Industrial Organization, 2014, vol. 34, issue C, 66-74

Abstract: This paper compares the relative performance of different organizational structures for the decision of accepting or rejecting a project of uncertain quality. When the principal is uninformed and relies on the advice of an informed and biased agent, cheap-talk communication is persuasive and it is equivalent to delegation of authority, provided that the agent's bias is small. When the principal has access to additional private information, cheap-talk communication dominates both (conditional) delegation and more democratic organizational arrangements such as voting with unanimous consensus.

Keywords: Information; Cheap talk; Delegation; Voting (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:34:y:2014:i:c:p:66-74

DOI: 10.1016/j.ijindorg.2014.03.004

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