Delegation and Consultation with Contingent Information

Abstract

We study strategic communication between a principal and an agent when both have private information that collectively determines the principal's optimal decision. The principal's possession of decision-relevant information makes the agent uncertain how her report influences the principal's decision. The agent's expectations regarding the principal's information and the relationship between the parties' information affect both the informativeness of communication from the agent and the allocation of decision-making authority when the principal has the option to consult the agent or delegate to her.