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An example of conflicts of interest as pandering disincentives

Saori Chiba () and Kaiwen Leong

Economics Letters, 2015, vol. 131, issue C, 20-23

Abstract: Consider an uninformed decision maker (DM) who communicates with a partially informed agent through cheap talk. DM can choose a project to implement or the outside option of no project. Unlike the current literature, we show that if there exists multiple dimensions of conflicts of interests between a single agent and a single receiver (DM), an increase in the conflict of interest in one dimension may actually improve cheap talk communication given that it acts as a countervailing force to conflicts of interest in other dimensions.

Keywords: Cheap talk; Conflicts of interest; Pandering (search for similar items in EconPapers)
JEL-codes: D82 D83 M10 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.econlet.2015.03.028

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