Where Does the Sender's Information Come from? Communication with Endogenous Information Acquisition

Abstract

I develop a theory of communication in which a sender gathers costly information before giving advice to a receiver. In a general setting, I show that the sender always communicates all her information to the receiver in every equilibrium. In the uniform-quadratic model with an 'upwardly biased' sender, communication can be more informative when the sender recommends a larger action. The differences between these results and those in Crawford and Sobel (1982) are driven by the countervailing effects between moral hazard in acquiring information and adverse selection in reporting information.