Communication via Third Parties

32 Pages Posted: 3 Mar 2020 Last revised: 5 Mar 2021

See all articles by Jacopo Bizzotto

Jacopo Bizzotto

Oslo Business School - OsloMet

Eduardo Perez-Richet

Sciences Po

Adrien Vigier

University of Oxford - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 5, 2021

Abstract

A principal designs an information structure and chooses transfers to an agent that are contingent on the action of a receiver. The principal faces a trade-off between, on the one hand, designing an information structure maximizing non-monetary payoffs, and on the other hand, minimizing the information rent that must be conceded to the agent in order to implement the information structure which the principal designed. We examine how this trade-off shapes communication. Our model can be applied to study the relationship between, e.g.: political organizations and the public relations companies that campaign on their behalf, firms and the companies marketing their products, consultancies and the analysts they employ.

Keywords: Information Design, Moral Hazard, Agency Cost, Information Acquisition

JEL Classification: C72, D82

Suggested Citation

Bizzotto, Jacopo and Perez-Richet, Eduardo and Vigier, Adrien, Communication via Third Parties (March 5, 2021). Available at SSRN: https://ssrn.com/abstract=3530804 or http://dx.doi.org/10.2139/ssrn.3530804

Jacopo Bizzotto

Oslo Business School - OsloMet ( email )

Pilestredet 35
Oslo, 0166
Norway

Eduardo Perez-Richet

Sciences Po ( email )

28, rue des Saints-Pères
Paris, Paris 75007
France

Adrien Vigier (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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