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Efficient Communication in Organizations

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  • Federico Vaccari

Abstract

This paper studies the organization of communication between biased senders and a receiver. Senders can misreport their private information at a cost. Efficiency is achieved by clearing information asymmetries without incurring costs. Results show that only one communication protocol is efficient, robust to collusion, and free from unnecessary complexities. This protocol has a simple, adversarial, and public structure. It always induces efficient equilibria, for which a closed-form characterization is provided. The findings are relevant for the design of organizations that seek to improve decision-making while limiting wasteful influence activities.

Suggested Citation

  • Federico Vaccari, 2022. "Efficient Communication in Organizations," Papers 2211.13605, arXiv.org, revised Apr 2024.
    • Handle: RePEc:arx:papers:2211.13605
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    References listed on IDEAS

    as
    1. Battaglini Marco, 2004. "Policy Advice with Imperfectly Informed Experts," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-34, April.
    2. Marco Battaglini, 2002. "Multiple Referrals and Multidimensional Cheap Talk," Econometrica, Econometric Society, vol. 70(4), pages 1379-1401, July.
    3. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February.
    4. Navin Kartik, 2009. "Strategic Communication with Lying Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(4), pages 1359-1395.
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    6. Philippe Jehiel, 1999. "Information Aggregation and Communication in Organizations," Management Science, INFORMS, vol. 45(5), pages 659-669, May.
    7. Vijay Krishna & John Morgan, 2001. "A Model of Expertise," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 747-775.
    8. Vaccari, Federico, 2023. "Competition in costly talk," Journal of Economic Theory, Elsevier, vol. 213(C).
    9. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    10. Kartik, Navin & Ottaviani, Marco & Squintani, Francesco, 2007. "Credulity, lies, and costly talk," Journal of Economic Theory, Elsevier, vol. 134(1), pages 93-116, May.
    11. Marco Ottaviani & Francesco Squintani, 2006. "Naive audience and communication bias," International Journal of Game Theory, Springer;Game Theory Society, vol. 35(1), pages 129-150, December.
    12. Inga Deimen & Dezsö Szalay, 2019. "Information and Communication in Organizations," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 545-549, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    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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