Communication via Third Parties

Jacopo Bizzotto (1) , Eduardo Perez-Richet (2, 3) , Adrien Vigier (4)

1 OsloMet - Oslo Metropolitan University
2 ECON - Département d'économie (Sciences Po)
3 CEPR - Center for Economic Policy Research
4 UON - University of Nottingham, UK

A principal designs an information structure and chooses transfers to an agent that are contingent on the action of a receiver. The principal faces a trade-off between, on the one hand, designing an information structure maximizing non-monetary payoffs, and on the other hand, minimizing the information rent that must be conceded to the agent in order to implement the information structure which the principal designed. We examine how this trade-off shapes communication. Our model can be applied to study the relationship between, e.g.: political organizations and the public relations companies that campaign on their behalf, firms and the companies marketing their products, consultancies and the analysts they employ.

Keywords: Information Design; Moral Hazard; Agency Cost; Information Acquisition

Domains: Economics and Finance

Jacopo Bizzotto, Eduardo Perez-Richet, Adrien Vigier. Communication via Third Parties. 2022. ⟨hal-03874010⟩