Information sharing between vertical hierarchies

Salvatore Piccolo () and Marco Pagnozzi

Games and Economic Behavior, 2013, vol. 79, issue C, 201-222

Abstract: When do principals independently choose to share the information obtained from their privately informed agents? Information sharing affects contracting within competing organizations and induces agentsʼ strategies to be correlated through the distortions imposed by principals to obtain information. We show that the incentives to share information depend on the nature of upstream externalities between principals and the correlation of agentsʼ information. With small externalities, principals share information when externalities and correlation have opposite signs, and do not share information when externalities and correlation have the same sign. In this second case, principals face a prisonersʼ dilemma since they obtain higher profits by sharing information.

Keywords: Communication; Information sharing; Adverse selection; Vertical hierarchies (search for similar items in EconPapers)
JEL-codes: D43 D82 L14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Related works:
Working Paper: Information Sharing between Vertical Hierarchies (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:79:y:2013:i:c:p:201-222

DOI: 10.1016/j.geb.2013.02.005

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