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The strategist and the tactician

Shiran Rachmilevitch

Journal of Economic Behavior & Organization, 2018, vol. 155, issue C, 427-434

Abstract: An agent recommends one of n alternatives to a decision maker (DM), who needs to choose one alternative. Each alternative has a benefit and a cost. The agent knows the benefits, but not the costs; the DM knows the costs, but not the benefits. The DM’s payoff equals the benefit minus the cost, the agent’s payoff equals the benefit. The interpretation is that the agent is a “tactician” whereas the DM is a “strategist,” in the sense that they have a common component in their preferences (the benefit) but the strategist further has “big picture considerations” (the costs), which are absent from the tactician’s world view. If there are two alternatives, the agent recommends a maximum-benefit alternative in any non-trivial equilibrium. With more than two alternatives such equilibrium exists if the model is symmetric, but not if asymmetry exceeds a certain level.

Keywords: Sender–receiver; Strategist-tactician (search for similar items in EconPapers)
JEL-codes: D71 D72 D83 D84 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:jeborg:v:155:y:2018:i:c:p:427-434