Communication Breakdown: Consultation or Delegation from an Expert with Uncertain Bias

Rush Anthony, Vladimir Smirnov and Andrew Wait ()
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Rush Anthony: Reserve Bank of Australia, rusha@rba.gov.au

The B.E. Journal of Theoretical Economics, 2010, vol. 10, issue 1, 29

Abstract: When communicating with an uninformed decision maker, the motives behind an expert's message are often unclear. To explore this and investigate its impact on organizational design, we extend the cheap-talk model of Crawford and Sobel (1982) to allow for uncertainty over the expert's bias. We find that, in contrast to Dessein (2002), it is possible that the decision maker prefers communication to delegation; that is, it can be optimal for a decision maker to retain control and to solicit advice from the expert.

Keywords: delegation; communication; uncertainty; bias; cheap-talk model (search for similar items in EconPapers)
Date: 2010
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DOI: 10.2202/1935-1704.1612

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