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  1. Starting small to communicate
    Author: Atakan, Alp; Koçkesen, Levent; Kubilay, Elif
    Published: January 2018
    Publisher:  Koç University - TÜSİAD Economic Research Forum, Sarıyer/Istanbul

    We analyze a repeated cheap-talk game in which the receiver is privately informed about the conflict of interest between herself and the sender and either the sender or the receiver controls the stakes involved in their relationship. We focus on... more

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 133 (2018,5)
    Inter-library loan:
    No inter-library loan

     

    We analyze a repeated cheap-talk game in which the receiver is privately informed about the conflict of interest between herself and the sender and either the sender or the receiver controls the stakes involved in their relationship. We focus on payoff-dominant equilibria that satisfy a Markovian property and show that if the potential conflict of interest is large, then the stakes increase over time, i.e., "starting small" is the unique equilibrium arrangement. In each period, the receiver plays the sender’s ideal action with positive probability and the sender provides full information as long as he has always observed his ideal actions in the past. We also show that as the potential conflict of interest increases, the extent to which the stakes are back-loaded increases, i.e., stakes are initially smaller but grow faster.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/202979
    Series: Koç University - TÜSİAD Economic Research Forum working paper series ; 1805 (January 2018)
    Scope: 1 Online-Ressource (circa 49 Seiten), Illustrationen
  2. Optimal delegation of sequential decisions
    the role of communication and reputation
    Author: Atakan, Alp; Koçkesen, Levent; Kubilay, Elif
    Published: January 2017
    Publisher:  Koç University - TÜSİAD Economic Research Forum, Sarıyer/Istanbul

    We analyze delegation of a set of decisions over time by an informed principal to a potentially biased agent. Each period the principal observes a state of the world and sends a “cheap-talk” message to the agent, who is privately informed about her... more

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 133 (2017,1)
    Inter-library loan:
    No inter-library loan

     

    We analyze delegation of a set of decisions over time by an informed principal to a potentially biased agent. Each period the principal observes a state of the world and sends a “cheap-talk” message to the agent, who is privately informed about her bias. We focus on principal-optimal equilibria that satisfy a Markovian property and show that if the potential bias is large, then the principal assigns less important decisions in the beginning and increases the importance of decisions towards the end. In the beginning of their relationship, the biased agent acts exactly in accordance with the principal’s preferences, while towards the end, she starts playing her own favorite action with positive probability and gradually builds up her reputation. Principal provides full information in every period as long as he has always observed his favorite actions in the past. If we interpret the evolution of the importance of decisions over time as the career path of an agent, this finding fits the casual observation that an agent’s career usually progresses by making more and more important decisions and provides a novel explanation for why this is optimal. We also show that the bigger the potential conflict of interest, the lower the initial rank and the faster the promotion.

     
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    Content information
    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/166741
    Series: Koç University - TÜSİAD Economic Research Forum working paper series ; 1701
    Scope: 1 Online-Ressource (circa 33 Seiten), Illustrationen