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Asymmetric‐information allocation to avoid coordination failure

Fumitoshi Moriya and Takuro Yamashita

Journal of Economics & Management Strategy, 2020, vol. 29, issue 1, 173-186

Abstract: In the context of team production, this paper studies the optimal (deterministic and stochastic) information allocation that implements desired effort levels as the unique Bayesian equilibrium. We show that under certain conditions, it is optimal to asymmetrically inform agents even though they may be ex ante symmetric. The main intuition is that informing the agents asymmetrically can be effective in avoiding “bad” equilibria, that is, equilibria with coordination failure.

Date: 2020
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https://doi.org/10.1111/jems.12329

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