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Designing communication hierarchies

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  • Migrow, Dimitri

Abstract

This paper studies the design of communication hierarchies in a setup with a principal and multiple agents with private agendas. The agents observe unverifiable binary signals relevant to the principal's choice and the principal is uninformed. The principal can only decide who reports to whom and in which order. We show that a two-layer hierarchy where all agents report directly to the principal is dominated by hierarchies with a larger number of layers. We characterize conditions for the choice of a three-layer hierarchy with a single intermediator, and for the choice of a three-layer hierarchy with two intermediators where the agents are separated according to their preferences.

Suggested Citation

  • Migrow, Dimitri, 2021. "Designing communication hierarchies," Journal of Economic Theory, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:jetheo:v:198:y:2021:i:c:s0022053121001666
    DOI: 10.1016/j.jet.2021.105349
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    Cited by:

    1. Daniel Habermacher, 2022. "Authority and Specialization under Informational Interdependence," Working Papers 142, Red Nacional de Investigadores en Economía (RedNIE).
    2. Laclau, Marie & Renou, Ludovic & Venel, Xavier, 2024. "Communication on networks and strong reliability," Journal of Economic Theory, Elsevier, vol. 217(C).
    3. Daniel Habermacher, 2022. "Information Aggregation in Multidimensional Cheap Talk," Working Papers 169, Red Nacional de Investigadores en Economía (RedNIE).

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    More about this item

    Keywords

    Organizational design; Strategic communication; Information aggregation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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