Well‐Informed Intermediaries in Strategic Communication

19 Pages Posted: 19 Apr 2012

See all articles by Wei Li

Wei Li

Vancouver School of Economics, University of British Columbia

Date Written: April 2012

Abstract

A privately informed sender may influence the decision maker through an intermediary who is better informed than him. I assume that the objective sender and intermediary pass on their best information, while the biased ones prefer a particular action but also have reputational concerns. I show that the biased intermediary selectively incorporates the sender's information to push his agenda, and his truth‐telling incentives always decrease in those of the biased sender. Hence, measures making it more costly for the sender to lie worsen the biased intermediary's distortion, and may make the decision maker strictly worse off.

JEL Classification: C70, D82, M31

Suggested Citation

Li, Wei, Well‐Informed Intermediaries in Strategic Communication (April 2012). Economic Inquiry, Vol. 50, Issue 2, pp. 380-398, 2012, Available at SSRN: https://ssrn.com/abstract=2042367 or http://dx.doi.org/10.1111/j.1465-7295.2010.00306.x

Wei Li (Contact Author)

Vancouver School of Economics, University of British Columbia ( email )

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