Information acquisition, referral, and organization

• Autores: Simona Grassi, Ching-to Albert Ma
• Localización: The Rand Journal of Economics, ISSN-e 1756-2171, Vol. 47, Nº. 4, 2016, págs. 935-960
• Idioma: inglés
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• Resumen

  • Each of two experts may provide a service to a client. Experts' cost comparative advantage depends on an unknown state, but an expert may exert effort to get a private signal about it. In a market, an expert may refer the client to the other for a fee. In equilibrium, only one expert exerts effort and refers, and the equilibrium allocation is inefficient. Referral efficiency can be restored when experts form an organization, in which a referring expert must bear the referred expert's cost. However, the referred expert shirks from work effort because of the lack of cost responsibility.