Raghul Venkatesh

job market seminar

Raghul Venkatesh

Communication and commitment with constraints

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

5-9 boulevard Maurice Bourdet
13001 Marseille

Tuesday, January 8 2019| 11:00am to 12:15pm

I study the role of communication and commitment between an informed and an unin-formed agent. The two agents contribute to a joint project such that (i) the agents’ actions are substitutable, and (ii) the actions are constrained. In the absence of commitment and when decision-making is simultaneous, there is full information revelation as long as con-straints are not binding. The presence of binding constraints results in only partial revelation of information in equilibrium. The most informative equilibrium is strictly pareto domi-nant. When decisions are sequential, information revealed is unchanged but the actions of the agents change, resulting in higher welfare. Finally, I characterize the ex ante optimal commitment mechanism for the uninformed agent. Providing greater commitment power strictly raises welfare of both agents and leads to greater overall efficiency.