Collusion and Delegation under Information Control

This paper studies how information control affects incentives for collusion and optimal organizational structures in principal-supervisor-agent relationships. I consider a model in which the principal designs the supervisor's signal on the productive agent's private information and the supervisor and agent may collude. I show that the principal optimally delegates the interaction with the agent to the supervisor if either the supervisor's budget is large or the value of production is small. The principal prefers direct communication with the supervisor and agent if the supervisor's budget is sufficiently small and the value of production is high

Bayesian signaling

This paper introduces private sender information into a sender-receiver game of Bayesian persuasion with monotonic sender preferences. I derive properties of increasing differences related to the precision of signals and use these to fully characterize the set of equilibria robust to the intuitive criterion. In particular, all such equilibria are either separating, i.e., the sender's choice of signal reveals his private information to the receiver, or fully disclosing, i.e., the outcome of the sender's chosen signal fully reveals the payoff-relevant state to the receiver. Incentive compatibility requires the high sender type to use sub-optimal signals and therefore generates a cost for the high sender type in comparison to a full information benchmark in which the receiver knows the sender's type. The receiver prefers the equilibrium outcome over this benchmark for large classes of monotonic sender preferences

Benefiting from Bias: Delegating to Encourage Information Acquisition

A principal delegates decisions to a biased agent. Payoffs depend on a state that the principal cannot observe. Initially, the agent does not observe the state, but he can acquire information about it at a cost. We characterize the principal's optimal delegation set. This set features a cap on high decisions and a gap around the agent's ex ante favorite decision. It may even induce ex-post Pareto-dominated decisions. Under certain conditions on the cost of information acquisition, we show that the principal prefers delegating to an agent with a small bias than to an unbiased agent

Benefiting from Bias:Delegating to Encourage Information Acquisition

A principal delegates decisions to a biased agent. Payoffs depend on a state that the principal cannot observe. Initially, the agent does not observe the state, but he can acquire information about it at a cost. We characterize the principal's optimal delegation set. This set features a cap on high decisions and a gap around the agent's ex ante favorite decision. The set may even induce ex-post Pareto-dominated decisions. Under certain conditions on the cost of information acquisition, we show that the principal prefers delegating to an agent with a small bias than to an unbiased agent

Benefiting from Bias:Delegating to Encourage Information Acquisition

A principal delegates decisions to a biased agent. Payoffs depend on a state that the principal cannot observe. Initially, the agent does not observe the state, but he can acquire information about it at a cost. We characterize the principal's optimal delegation set. This set features a cap on high decisions and a gap around the agent's ex ante favorite decision. The set may even induce ex-post Pareto-dominated decisions. Under certain conditions on the cost of information acquisition, we show that the principal prefers delegating to an agent with a small bias than to an unbiased agent

Persuading skeptics and reaffirming believers

In a world where rational individuals may hold different prior beliefs, a sender can influence the behavior of a receiver by controlling the informativeness of a signal. We characterize the set of distributions of posterior beliefs that can be induced by a signal, and provide necessary and sufficient conditions for a sender to benefit from information control. We examine a class of models with no value of information control under common priors, and show that a sender generically benefits from information control under heterogeneous priors. We extend our analysis to cases where the receiver’s prior is unknown to the sender

Strategic Information Acquisition and Transmission

This paper explores the implications of costly information acquisition in a strategic communication setting. We show that equilibrium decisions based on a biased expert's advice may be more precise than when information is directly acquired by the decision maker, even if the expert is not more efficient than the decision maker at acquiring information. This result bears important implications for organization design. Communication by an expert to a decision maker may often outperform delegation of the decision-making authority to the expert, as well as centralization by the decision maker of both information acquisition and decision-making authority

THREE ESSAYS ON INFORMATION TRANSMISSION IN ASYMMETRIC INFORMATION GAMES

This dissertation consists of three chapters where we study information transmission in various environments.The first chapter analyzes the effect of the presence of an uninformed sender on the information transmission between an informed sender and the receiver. The sender is uninformed with a positive probability and it is not verifiable whether she is informed or not. In almost all equilibria, the uninformed sender pools with a subset of types of the informed sender. We show that there exists an equilibrium in which the informed sender's cheap talk message conveys more precise information and the informed sender is better off by the presence of the uninformed sender.In the second chapter, a buyer is uncertain of information on product qualities. We introduce a variable that generates social value of information, which is buyer's action such as the usage and maintenance of a product after purchase. If the buyer is concerned about his action, the seller has more incentive to reveal product information. Furthermore, more information is revealed as the variance of the quality is larger or as the average quality is lower. In this model, the certification cost is increasing in the sense that a better certificate is more costly. Then, there are multiple equilibria and the least level of revelation is ex ante Pareto optimal.In the third chapter, we study firms' voluntary disclosure in an oligopoly market for differentiated products in which firms are allowed to advertise a rival's product as well as their own product. We show that full information is revealed by a high quality firm's comparative advertisement, where the advertisement on the rival's product is negative. Moreover, full revelation is the unique equilibrium outcome. The results imply that by allowing for negative advertisement on rivals' products, a society can increase consumers' welfare without mandatory disclosure laws

Persuading voters

In a symmetric information voting model, an individual (information controller) can influence voters’ choices by designing the information content of a public signal. We characterize the controller’s optimal signal. With a non-unanimous voting rule, she exploits voters’ heterogeneity by designing a signal with realizations targeting di↵erent winning-coalitions. Consequently, under simple-majority voting rule, a majority of voters might be strictly worse o↵ due to the controller’s influence. We characterize voters’ preferences over electoral rules, and provide conditions for a majority of voters to prefer a supermajority (or unanimity) voting rule, in order to induce the controller to supply a more informative signal