TOM (Théorie, Organisation et Marchés) Lunch Seminar

Du 21/01/2016 de 12:45 à 13:45

Campus jourdan, Bâtiment G, Rez de chaussée, Salle 10

RIVERA Thomas (HEC)

Incentives and the Structure of Communication

This paper analyzes the incentives that arise within an organization when communication is restricted to a particular network structure (e.g., a hierarchy). We show that restricting communication between the principal and agents may create incentives for the agents to misbehave when transmitting information and tasks throughout the organization. Such incentives can render the principal's most preferred outcome infeasible and therefore introduces a trade off between the cost of communication borne by the principal and the benefit of curbing incentives to deviate induced by the communication structure. To remedy this issue, we provide necessary and sufficient conditions on the topology of the network of communication such that restricting communication to a particular network does not restrict the set of outcomes that the principal could otherwise achieve. In this sense, we show that for any underlying incentives and any outcome available when communication is unrestricted, there exists a (finite) communication scheme restricted to a particular network that implements this outcome (i.e., does not induce agents to misbehave in the communication phase) if and only if that network satisfies our conditions