ESSAYS ON THEORY OF INFORMATION

CHAPTER 1: Informational Control and Organizational DesignThis essay focuses on organizational issues of allocating authority between an uninformed principal and an informed expert. We show that the established result of Dessein (2002) that delegating decisions to a perfectly informed expert is generally better than communication is reversed if the principal can restrict the precision of the expert's information (without learning its content). We demonstrate that these organizational forms―informational control and delegation―can be either complements or substitutes, depending on the principal's ability to affect the expert's discretion about the set of allowed policies.CHAPTER 2: Dynamic Information Revelation in Cheap TalkThis essay investigates a multi-stage version of Crawford and Sobel's (1982) communication game in which the principal can affect the quality of the expert's private information at each stage (without learning its content). We construct a mechanism of dynamic updating of expert's information, which refines the expert's information step-by-step, preserving truth-telling communication at every stage. This allows the principal to reveal approximately full information in a large sub-interval of the state space. As a result, the payoff efficiency in multi-stage communication relative to one-stage communication and other organizational forms rises without a bound as the bias in preferences falls.CHAPTER 3: Information Revelation in Competitive MarketsThis essay analyzes a market with multiple sellers and differentiated products. We investigate the sellers' incentives to reveal product relevant information that affects the buyer's private valuations. The main finding is that when the number of sellers reaches some critical (but finite) number, this results in the unique symmetric equilibrium with full disclosure of information by all sellers. Thus, unlike the results by Lewis and Sappington (1994) and Johnson and Myatt (2006) for monopoly, which state that the monopolist reveals either full information or no information, competition refines the seller's dichotomic decisions to a single extreme only. Also, we show that the market efficiency is always bounded away from full efficiency, but the magnitude of inefficiency converges to zero at a high rate as competition intensifies.