Working Paper: CEPR ID: DP11105
Authors: Winand Emons; Claude Fluet
Abstract: A decision-maker relies on information of parties affected by her decision. These parties try to influence her decision by selective disclosure of facts. As is well known from the literature, competition between the informed parties constrains their ability to manipulate information. We depart from this literature by introducing a cost to communicate. Our parties trade off their reporting cost against the effect on the decision. Typically, they never reveal all information. A better outcome may be implemented if the decision-maker adopts an active stance by barring one party from reporting or through cheap talk allowing coordination on a particular equilibrium.
Keywords: active judging; adversarial disclosure; inquisitorial; persuasion
JEL Codes: D82; K41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reporting costs (M41) | level of information disclosed (D82) |
| active strategies (O36) | adjudicator's ability to make appropriate decisions (K41) |
| reporting costs (M41) | unique equilibrium (undisclosed states of nature) (C62) |
| active strategies (barring one party from reporting) (G34) | better-informed decision (D80) |