An example of conflicts of interest as pandering disincentives
Date of Issue2015
School of Humanities and Social Sciences
Consider an uninformed decision maker (DM) who communicates with a partially informed agent through cheap talk. DM can choose a project to implement or the outside option of no project. Unlike the current literature, we show that if there exists multiple dimensions of conflicts of interests between a single agent and a single receiver (DM), an increase in the conflict of interest in one dimension may actually improve cheap talk communication given that it acts as a countervailing force to conflicts of interest in other dimensions.
DRNTU::Humanities::General::Careers and profession
© 2015 Elsevier B.V. This is the author created version of a work that has been peer reviewed and accepted for publication by Economics Letters, Elsevier B.V. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [Article DOI: http://dx.doi.org/10.1016/j.econlet.2015.03.028].