The Organization of Expertise in the Presence of Communication

24 Pages Posted: 11 Feb 2010

See all articles by Flavia Roldan

Flavia Roldan

Public-Private Sector Research Center, IESE Business

Multiple version iconThere are 2 versions of this paper

Date Written: November 30, 2009

Abstract

A decision-maker has to elicit information from informed multiple experts about a policy's value. The principal may prevent communication among the agents. However, it may be in the principal's interest to allow communication among them. I assume that communication allows synergies to emerge among the experts but also opens the possibility of collusion among them. I study the optimal design of contracts, focusing on the organization of expertise in the communication phase. I show that, from the principal's point of view, when the advantage of synergies prevails over the collusion problem, communication dominates the no communication case. However, synergies will always prevail if the principal lets agents communicate with each other before they make their choices rather than after.

Keywords: information acquisition, communication, coordination, collusion, expertise, organization

JEL Classification: D81, D82, L23

Suggested Citation

Roldan, Flavia, The Organization of Expertise in the Presence of Communication (November 30, 2009). IESE Business School Working Paper No. 835. Available at SSRN: https://ssrn.com/abstract=1550691 or http://dx.doi.org/10.2139/ssrn.1550691

Flavia Roldan (Contact Author)

Public-Private Sector Research Center, IESE Business ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

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