Journal of Political Economy Vol. 117 No. 5 2009
Opinions as Incentives
Abstract
We study costs and benefits of differences of opinion between an adviser and a decision maker. Even when they share the same underlying preferences over decisions, a difference of opinion about payoff‐relevant information leads to strategic information acquisition and transmission. A decision maker faces a fundamental trade‐off: a greater difference of opinion increases an adviser's incentives to acquire information but exacerbates the strategic disclosure of any information that is acquired. Nevertheless, when choosing from a rich pool of opinion types, it is optimal for a decision maker to select an adviser with some difference of opinion. Centralization of authority is essential to harness these incentive gains since delegation to the adviser can discourage effort.
- DOI
- 10.1086/648432
- Volume
- 117
- Issue
- 5
- Pages
- 815-860
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref