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WELL‐INFORMED INTERMEDIARIES IN STRATEGIC COMMUNICATION
Author(s) -
LI WEI
Publication year - 2012
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2010.00306.x
Subject(s) - communication source , intermediary , incentive , cheap talk , strategic communication , decision maker , microeconomics , distortion (music) , economics , action (physics) , business , law and economics , computer science , marketing , telecommunications , amplifier , physics , management , bandwidth (computing) , management science , quantum mechanics
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 C70, D82, M31)