Motivating Information Acquisition through Risky Decision-making∗ Job Market Paper

It is difficult to motivate advisors to acquire information through standard performancecontracts when for instance outcomes are uncertain and/or only observed in the distant future. Decision-makers may however exploit advisors’ desire to influence the outcome. To investigate this, I build a model in which a decision-maker and an advisor both intrinsically care about the decision’s consequences, which depend on an unknown state of the world. To reduce uncertainty, the advisor can provide information of low or high accuracy; this information becomes public but the decision-maker cannot assess its accuracy with certainty, and monetary transfers are moreover unavailable. I show that, when the decision-maker can pre-commit to a decision-rule, he should behave as if the information provided is more accurate than it actually is, and thus adopt excessively risky behavior. This result carries over in environments with private information and multiple advisors. Finally, I build upon this insight to also consider the case without commitment.