Vagueness and Information-Sharing
39 Pages Posted: 29 Sep 2014 Last revised: 10 Mar 2017
Date Written: August 17, 2016
This paper considers a model in which two heterogeneous principals need to concur to approve a project proposed by an agent. The agent provides them with information about the project's desirability and the principals can agree to share it. We seek to understand the impact of such an agreement when the agent can secretly choose the vagueness of the information reported to the principals. We show that, when the project is controversial and the principals retain their veto power, information-sharing makes the agent use very vague information. In these circumstances, both principals are willing to extend cooperation to the decision-making in order to extract a more precise information from the agent.
Keywords: Common agency, public communication, signal-jamming.
JEL Classification: D83, F53, L4.
Suggested Citation: Suggested Citation