Centre for Development Economics
Department of Economics, Delhi School of Economics


Information Transmission with Substitutability and Resource Constraints


Raghul S Venkatesh 
Aix-Marseille School of Economics


8th March 2018 (Thursday) at 3:00 PM

Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics

All are cordially invited

I study strategic information transmission between an informed Sender and an uninformed Receiver when (i) both players make decisions simultaneously and (ii) decisions are strategic substitutes. In the absence of resource constraints, there is full transparency and information is completely revealed by the Sender. This results in full efficiency for both players. The presence of resource constraints restricts transparency, resulting in the partial revelation of information. The most informative equilibrium is ex-ante efficient for both Sender and Receiver, and ex-post efficient only for the Sender. When the Receiver moves first instead (sequential protocol), there is no improvement in transparency but the welfare of both players is higher compared to the simultaneous protocol. Finally, I characterize the optimal commitment mechanism for the Receiver. It exhibits two key features: maximal resource extraction from the Sender and capping of contributions by the Receiver. The commitment protocol ensures both greater transparency and a higher welfare for both players compared to the sequential protocol. This provides a novel rationale for ex-ante commitments in organizations and governments.

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