WELL‐INFORMED INTERMEDIARIES IN STRATEGIC COMMUNICATION

Wei Li

Economic Inquiry, 2012, vol. 50, issue 2, 380-398

Abstract: A privately informed sender may influence the decision maker through an intermediary who is better informed than him. I assume that the objective sender and intermediary pass on their best information, while the biased ones prefer a particular action but also have reputational concerns. I show that the biased intermediary selectively incorporates the sender's information to push his agenda, and his truth‐telling incentives always decrease in those of the biased sender. Hence, measures making it more costly for the sender to lie worsen the biased intermediary's distortion, and may make the decision maker strictly worse off. (JEL C70, D82, M31)

Date: 2012
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