Communication in the shadow of catastrophe

Author / Creator

Deimen, Inga, author

Available as

Online

Summary

We study the role of risk in strategic information transmission. We show that an increased likelihood of extreme states -- heavier tails -- decreases the amount of information transmission and make...

We study the role of risk in strategic information transmission. We show that an increased likelihood of extreme states -- heavier tails -- decreases the amount of information transmission and makes it optimal to alter the mode of decision-making from communication to simple delegation. Moreover, the worst-case losses under communication increase relative to the worst-case losses under delegation when the tails get heavier.

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