Competing influence

Enrico Sette

No 693, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper investigates the incentives of experts competing to influence decision making. Competition for influence is shown to have an ambiguous effect on truthtelling incentives and a decision maker might be better off relying on one source of information only. This result has important implications for organizational design: the paper shows that delegation and favoritism can arise as a way to promote the correct flow of information within an organization. Delegation can lead to stronger truthtelling incentives than communication and it can be optimal when the importance of the decision is intermediate or high. Favoritism, consisting in biasing the competition for influence in favour of one expert, can further increase truthtelling incentives.

Keywords: reputation; competition; delegation; favoritism (search for similar items in EconPapers)
JEL-codes: C73 D82 L23 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-cta and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_693_08

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