Please use this identifier to cite or link to this item: https://hdl.handle.net/2440/135260
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Type: Journal article
Title: Delegation based on cheap talk
Author: Zhang, S.X.
Bayer, R.-C.
Citation: Theory and Decision: an international journal for multidisciplinary advances in decision sciences, 2023; 94(2):333-361
Publisher: Springer
Issue Date: 2023
ISSN: 0040-5833
1573-7187
Statement of
Responsibility: 
Sookie Xue Zhang, Ralph-Christopher Bayer
Abstract: We study a real-effort environment, where a delegator has to decide if and to whom to delegate a task. Applicants send cheap-talk messages about their past performance before the delegator decides. We experimentally test the theoretical prediction that information transmission does not occur in equilibrium. In our experiment, we vary the message space available to the applicants and compare the information transmitted as well as the level of efficiency achieved. Depending on the treatment, applicants can either submit a Number indicating past performance, an Interval in which past performance falls, or a free Text message. We observe that messages contain information in all treatments. Interestingly, information transmission occurs only in the treatments where messages are intervals or free text. Social welfare is higher if messages are intervals or free text than precise numbers. Gender and ethnicity stereotypes only influence delegation in the Number treatment, where no information transmission takes place.
Keywords: Delegation; Cheap talk; Experiment; Efficient allocation
Description: Published online: 29 March 2022
Rights: © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022
DOI: 10.1007/s11238-022-09887-8
Published version: http://dx.doi.org/10.1007/s11238-022-09887-8
Appears in Collections:Economics publications

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