Working Papers

Delegation as a signal: implicit communication with full cooperation

Updated: August 2020

TI examine the issue of implicit signaling of inexpressible type through delegation in a communication game with perfectly aligned preferences, two-sided private information, and communication frictions. The model is analyzed in the context of decision-making in teams. A principal (manager) consults an agent (expert) to choose one of two actions. The manager has some tacit knowledge, which he cannot communicate and may acquire some imperfect, costly signal about the state of the world. After observing the signal, he may choose the action or delegate to the expert, who observes the state of the world perfectly. Even if the principal’s information acquisition and the signal are unobservable, the delegation, combined with private information, allows the agent to extract some signal about the tacit information. I show that for a large class of parameters there exists an equilibrium, in which the expert (upon delegation) can correctly understand “cues” and tailor the action to the manager’s needs. In particular, the agent’s decision may be non-monotone in the state of the world.

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When competence hurts: revelation of complex information

Updated: November 2017

When the information might be complex and the information processing capacity of economic agents is uncertain, noisy messages do not necessarily indicate bad news. I exploit this intuition to examine a simple sender-receiver persuasion game in which the precise communication of the state of the world depends not only on sender’s efforts but also on the state’s complexity and the receiver’s competence. In this environment the sender-optimal equilibria maximize the amount of noise. The receiver faces a competence curse – a smarter type might end up with less information and lower payoff than a receiver with a somewhat smaller competence.

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