Bayesian Persuasion and Authority in Organizations

Abstract

We consider a persuasion model in which a sender wants to persuade an organization to implement a project of unknown quality. We analyze whether the principal of the organization can benefit from delegating authority to a biased agent who is uninformed about the merits of the project. We show that the principal can use delegation as a commitment device to incentivize the sender to produce more informative evidence about the merits of the project. Although delegation allows the agent to implement projects that the principal does not like, the improvement of evidence quality can dominate the costs, making the organization better off.