Well Informed Intermediaries in Strategic Communication
Economic Inquiry, Forthcoming
57 Pages Posted: 25 Aug 2009 Last revised: 31 Aug 2009
Date Written: August 24, 2009
Abstract
A privately informed sender may influence the decision maker through an intermediary who is better informed than him. I assume that the objective sender and intermediary pass on their best information, while the biased ones prefer a particular action but also have reputational concerns. I show that the biased intermediary selectively incorporates the sender's information to push his agenda, and his truth-telling incentives always decrease in those of the biased sender. Hence measures making it more costly for the sender to lie worsen the biased intermediary's distortion, and may make the decision maker strictly worse off.
Keywords: strategic communication through intermediaries, indirect marketing, reputational concerns
JEL Classification: C70, D82, M31
Suggested Citation: Suggested Citation
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