Operational-strategy Seminars

Abstract: We study a possible conflict of interests between a manager and a consultant, where each possesses a private signal regarding an unknown state. Each of them strives to provide

an accurate recommendation regarding the state, while preferring to be the only one to do so. Our analysis depicts a mapping from their expertise levels to the equilibria of this
game, showing that: (i) better-informed players may generate worse recommendations in equilibrium; and (ii) ordering the players so that the lower-level one provides the second
opinion typically improves the outcome. Moreover, we show that limiting the players’ liability facilitates cooperation and increases the probability of reaching a correct decision.