Information, Authority, and Smooth Communication in Organizations
May 11th, 2017
We study a general sender-receiver game with endogenous information. A designer chooses the information that the sender gets to observe with a view to maximizing aggregate surplus. In a world with correlated interests and noisy signals, information creates and resolves conflicts.
The optimum from the designer's perspective orthogonalizes the sender's preferred choice and the underlying conflicts between sender and receiver, enabling honest communication of the sender's unstrategically preferred choice.Communication and delegation of decision-rights become outcome equivalent.