Working Paper: CEPR ID: DP17319
Authors: William Fuchs; Satoshi Fukuda; Seyedmahyar Sefidgaran
Abstract: Two privately-informed agents must take a joint action without resorting to sidepayments. Size and location of the support of each agent's private types (their preferred action) determine the degree of conflict. Under high conflict, it is too costly to elicit agents' information, which leads to an optimal constant allocation. Delegation arises endogenously when there is conflict and asymmetry in the amount of private information. The agent with more private information dictates the allocation within somebounds. When supports overlap information is shared and sometimes ex-post inefficient actions are optimally taken. Welfare relative to the rst-best is non-monotone in conflict.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| asymmetric information (D82) | allocation (H77) |
| high conflict (D74) | cost of eliciting information (D89) |
| cost of eliciting information (D89) | fixed allocation (D51) |
| overlap of support (C34) | information sharing (O36) |
| information sharing (O36) | ex-post inefficiencies (D61) |
| conflicting preferences and asymmetric information (D82) | endogenous delegation (D73) |
| conflict levels (D74) | optimal decision-making efficiency (D61) |