Efficient Communication in Organizations

Abstract

This paper studies the organization of communication between biased senders and a receiver. Senders can misreport their private information at a cost. Efficiency is achieved by clearing information asymmetries without incurring costs. Results show that only one communication protocol is efficient, robust to collusion, and free from unnecessary complexities. This protocol has a simple, adversarial, and public structure. It always induces efficient equilibria, for which a closed-form characterization is provided. The findings are relevant for the design of organizations that seek to improve decision-making while limiting wasteful influence activities.