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Efficient Communication in Organizations

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  • Vaccari, Federico

Abstract

Organizations design their communication structures to improve decision-making while limiting wasteful influence activities. An efficient communication protocol grants complete information payoffs to all organization members, thereby overcoming asymmetric information problems at no cost. This paper characterizes efficient protocols assuming that: (i) some agents within the organization have the knowledge required for optimal decision-making; (ii) both the organization and consulted agents incur losses proportional to the exerted influence activities; and (iii) informed agents can discuss their strategies before being consulted. Under these assumptions, “public advocacy” is the unique efficient communication protocol. This result provides a novel rationale for public advocacy.

Suggested Citation

  • Vaccari, Federico, 2022. "Efficient Communication in Organizations," FEEM Working Papers 329583, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemwp:329583
    DOI: 10.22004/ag.econ.329583
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    More about this item

    Keywords

    Industrial Organization; Productivity Analysis;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • 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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