The Silent Treatment

March 2017
Geoffroy de Clippel, Kfir Eliaz, Kareen Rozen

In an organization, the attention of an executive decision-maker (principal) is sought by multiple subordinates (agents) eager to have their ideas implemented. Such attention-seeking imposes an externality on the principal, who can only implement one idea per period and may overlook valuable proposals. Her only means of providing incentives is her rule for selecting among proposals, which must be rational for her to follow. Can she design an idea-selection mechanism that circumvents this problem? This paper argues that in repeated interactions, the principal can ensure agents refrain from communicating ideas unless they are of the highest quality. The principal may achieve her first-best outcome even when she is fully attention constrained and has minimal information about the ability of agents. Whether her first best is achievable hinges on the organization's 'weakest link.'

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