Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2018

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Delegated Expertise, Authority, and Communication

Inga Deimen*, Dezso Szalay

Date: 2018-05-11 10:45 am – 11:15 am
Last modified: 2018-04-27

Abstract


A decision-maker needs to reach a decision and relies on an expert to
acquire information. Ideal actions of expert and decision-maker are
partially aligned and the expert chooses what to learn about each. The
decision-maker can either get advice from the expert or delegate
decision-making to him. Under delegation, the expert learns his privately
optimal action and chooses it. Under communication, advice based on such
information is discounted, resulting in losses from strategic communication.
We characterize the communication problems that make the expert acquire
information of equal use to expert and decision-maker. In these problems,
communication outperforms delegation.

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