DP16831 Communication in the shadow of catastrophe
|Author(s):||Inga Deimen, Dezso Szalay|
|Publication Date:||December 2021|
|Keyword(s):||authority, delegation, Extreme Events, organizations, risk, Strategic communication|
|Programme Areas:||Organizational Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=16831|
We study the role of risk in strategic information transmission. We show that an increased likelihood of extreme states â?? heavier tails â?? decreases the amount of information transmission and makes it optimal to alter the mode of decision-making from communication to simple delegation. Moreover, the worst-case losses under communication increase relative to the worst-case losses under delegation when the tails get heavier.