Communication, whether in organizations, personal relationships, politics or public information
campaigns, is one of the most complex and strategic activities of human beings. It may have
limited eﬀectiveness for two interacting reasons. The ﬁrst obstacle to eﬀectiveness is the lack
of congruence between the sender (source, persuader, speaker) and the receiver (recipient, addressee, listener). As many contributions have emphasized, the latter is unlikely to trust the
former’ s statement or recommendation if their interests diverge.
The second obstacle is also widely recognized, but has not yet been embodied into economic
modeling. The acts of formulating and absorbing the content of a communication are privately
costly, and so communication is subject to moral hazard in team (à la Holmström, 1982):
• As academics know too well, the sender must expand time, attention and other resources
to communicate eﬀectively her knowledge. Because the same message may convey diﬀerent
meanings to diﬀerent receivers, the sender must address the receiver’s knowledge (absorptive
capacity, language, perspective). Similarly, the message should not be so concise as not to
convey the relevant information, but should also not include information that is redundant, or
irrelevant or else well-known to the speciﬁc audience, so as not to distract attention or discourage
• Conversely, the receiver must pay attention, decode, understand, and rehearse the acquired
knowledge. He must decode the literal meaning, and, like the sender, take the properties of the
other side into account in order to make a proper inference of what the intended meaning is.
In a nutshell, “it takes two to communicate”. Senders complain that receivers fail to listen
or pay attention, and receivers gripe about the senders’ lack of preparation or clarity. Moral
hazard in team occurs even when the sender and the receiver form a “team” in the sense of team
that is when their...