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Communication and Consensus

Author

Listed:
  • Bilge Yilmaz

    (Stanford University)

  • Archishman Chakraborty

    (York University)

Abstract

Our model of communication belongs to the growing literature on cheap talk games starting from Crawford and Sobel (1982). In contrast to the Crawford-Sobel model in our setting the decision problem is binary not continuous. The fundamental coarseness of a binary decision problem is the principal reason why shareholder consensus can be generated in our setting. We feel that a binary decision model is the appropriate choice for the application we have in mind. In practice corporate boards rarely have control over fine details of management actions such as the scale of investment or the extent of marketing and advertising expenditures. Typically the board can only provide management with approval (or not) to pursue a particular strategic plan after taking account managerial discretion (and possible agency) in implementing the details of the plan.

Suggested Citation

  • Bilge Yilmaz & Archishman Chakraborty, 2009. "Communication and Consensus," 2009 Meeting Papers 1185, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:1185
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    References listed on IDEAS

    as
    1. Wouter Dessein, 2002. "Authority and Communication in Organizations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 811-838.
    2. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
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    Cited by:

    1. Ralph Boleslavsky & Tracy R. Lewis, 2011. "Advocacy and Dynamic Delegation," Working Papers 2011-7, University of Miami, Department of Economics.

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