Department of Economics-Master Calendar

Abstract: A principal and n ≥ 2 agents can launch a project if the principal proposes it and at least k agents accept. Their individual payoffs from the project depend on an ex ante unknown state. The principal can conduct a test to learn about the state and then communicate her findings to the agents via cheap talk. This paper focuses on comparing two communication regimes: public and private messaging. We show that public messaging is weakly dominant: any outcome implementable under private messaging can also be implemented under public messaging. Moreover, in a canonical environment with linear payoffs, we characterize the principal’s optimal test in each regime and show that public messaging can be strictly dominant if and only if there exist two agents who are the principal’s conflicting allies.