TY - JOUR
T1 - Delegated expertise, authority, and communication
AU - Deimen, Inga
AU - Szalay, Dezso
N1 - Funding Information:
* Deimen: Eller College of Management, The University of Arizona, 1130 E. Helen Street, Tucson, AZ 85721 and CEPR (email: [email protected]); Szalay: Institute for Microeconomics, University of Bonn, Adenauerallee 24-42, 53113 Bonn, Germany and CEPR (email: [email protected]). Jeff Ely was the coeditor for this article. We thank five anonymous referees for excellent comments. Many thanks to Andreas Blume, Jacques Crémer, Wouter Dessein, Peter Eso˝, Johannes Hörner, Ian Jewitt, Steve Matthews, Inés Morenode-Barreda, Herakles Polemarchakis, Soenje Reiche, Andrew Rhodes, Hamid Sabourian, and seminar participants at Arizona, Arizona State, Bonn, Cambridge, CETC (Toronto), Columbia, Crest, ESSET, (Gerzensee), MIT-Sloan, Northwestern, Southampton, St. Gallen, Toulouse, Utah WBEC, UPenn, Yale, Warwick, and Zürich for insightful discussions. Financial support by the DFG in the form of a SFB-TR15 grant is gratefully acknowledged. All remaining errors are our own. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper.
Publisher Copyright:
© 2019 American Economic Association. All Rights Reserved.
PY - 2019/4
Y1 - 2019/4
N2 - 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.
AB - 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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U2 - 10.1257/aer.20161109
DO - 10.1257/aer.20161109
M3 - Article
AN - SCOPUS:85063745948
SN - 0002-8282
VL - 109
SP - 1349
EP - 1374
JO - American Economic Review
JF - American Economic Review
IS - 4
ER -