Designing Communication Hierarchies to Elicit Information

Abstract

This paper studies how a manager can elicit employees' information by designing a hierarchical communication network. The manager decides who communicates with whom, and in which order, where communication takes the form of “cheap talk” (Crawford and Sobel, 1982). I show that the optimal network is shaped by two competing forces: an intermediation force that calls for grouping employees together and an uncertainty force that favours separating them. The manager optimally divides employees into groups of similar bias. Under simple conditions, the optimal network features a single intermediary who communicates directly to the manager.