Migrow, Dimitri (2015) Essays on economics of information. PhD thesis, University of Warwick.

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Abstract

This thesis consists of three chapters. In the first two chapters I study the optimal design of communication hierarchies between an uninformed decision maker and privately informed experts who have different preferences over decision maker's action.

The motivation for the model described in the first two chapters comes from the fact that in organizations, a central problem is that much of the information relevant for decision making is dispersed among employees who are biased and may lack the incentives to communicate their information to the management. This paper studies how a manager can elicit employees' information by designing a hierarchical communication network. The manager decides who communicates with whom, and in which order, where communication takes the form of cheap talk (Crawford and Sobel, 1982). I show that the optimal network is shaped by two competing forces: an intermediation force that calls for grouping employees together and an uncertainty force that favours separating them. The manager optimally divides employees into groups of similar bias. Under simple conditions, the optimal network features a single intermediary who communicates directly to the manager.

Third chapter is work in progress. Here, I study a situation in which a DM can commit to both communication networks and to the delegation of decision rights but not to transfers or arbitrary decision rules based on received information. I show a novel trade-off between centralization and decentralization with two experts and a decision maker, when experts receive noisy and complementary evidence. There is a single decision to be made, the decision maker can allocate the decision right to any of the experts, and can commit to communication channels betwent the players. I study conditions under which delegation combined with decentralized communication outperforms centralization. This happens because delegation encourages information sharing between the experts. Two conditions have to be satisfied in order for a decision maker to benefit from decentralization. First, the expert who decides over policy has to be not too biased towards the decision maker. Second, he should have a smaller distance to the bias of the other expert compared to the DM. In this case, the other expert is willing to reveal more information to the first expert compared to the centralized case.

Item Type:	Thesis or Dissertation (PhD)
Subjects:	H Social Sciences > HB Economic Theory
Library of Congress Subject Headings (LCSH):	Information behavior
Official Date:	September 2015
Dates:	Date Event September 2015 Submitted
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Squintani, Francesco ; Hammond, Peter J.
Extent:	viii, 111 leaves : charts
Language:	eng
URI:	http://wrap.warwick.ac.uk/id/eprint/80145

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