Designing Public Information for Strategic Advice

Abstract

A principal chooses an action using advice from an expert who privately knows local conditions. Before receiving advice, she can commission a public study of an independent state, such as future demand, that changes the expected conflict between their preferred actions. We show that the communication protocol determines the optimal study. Under optimal mediation, the value of advice is convex in conflict, making full revelation optimal. Under commitment to an action rule, the principal may prefer no information, while informative optimal studies include a report certifying high conflict. Under unmediated cheap talk, changes in the number of equilibrium messages create upward kinks in the value of advice. Optimal studies avoid interior communication thresholds and can induce two distant communication regimes while skipping every regime in between, strictly outperforming both full revelation and no information. When the principal retains the raw data, selective public disclosure can improve advice without sacrificing forecasting precision. We discuss implications for fiscal forecasts and spending agencies.