Designing Communication Hierarchies
CRETA Online Discussion Paper Series from Centre for Research in Economic Theory and its Applications CRETA
A manager aims to elicit employees’ information by designing a hierarchical communication network. She decides who communicates with whom, and in which order, where communication takes the form of “cheap talk” (Crawford and Sobel, 1982) and the information structure is beta-binomial. The optimal network is shaped by two competing forces: an intermediation force that calls for grouping employees together and an uncertainty force that favours separating them. The manager optimally divides employees into groups of similar bias. Under simple conditions on biases and a uniform prior, the optimal network features a single intermediary who communicates directly to the manager JEL classification numbers: C72 ;D82 ; D83
Keywords: organizational design; strategic communication; informationaggregation (search for similar items in EconPapers)
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