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Asking One Too Many? Why Leaders Need to Be Decisive

Junichiro Ishida and Takashi Shimizu

ISER Discussion Paper from Institute of Social and Economic Research, Osaka University

Abstract: It is often touted that decisiveness is one of the most important qualities to be possessed by leaders, broadly defined. To see how and why decisiveness can be a valuable asset in organizations, we construct a model of strategic information transmission where: (i) a decision maker solicits opinions sequentially from experts; (ii) how many experts to solicit opinions from is the decision maker's endogenous choice. We show that communication is less efficient when the decision maker is indecisive and cannot resist the temptation to ask for a second opinion. This result suggests that the optimal diversity of information sources depends critically on the strategic nature of communication: when communication is strategic, it is optimal to delegate information acquisition to a single party and rely exclusively on it; when it is not, it is optimal to diversify information sources and aggregate them via communication.

Date: 2012-10
New Economics Papers: this item is included in nep-cdm, nep-cta and nep-mic
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