We analyze a model of cheap talk in which an expert that faces a conflict of interest with a decision maker is concerned about establishing a reputation for having accurate information. In this environment, an increase in reputation above a certain threshold always makes truthful revelation more difficult to achieve, since experts with greater reputation can more easily sway the beliefs of decision makers in a desired direction. Thus, higher levels of reputation exacerbate the incentives of biased experts to misreport their private information. Decision makers may therefore be better off consulting less reputable experts when conflicts are more pronounced.

Experts, Conflicts of Interest, and Reputation for Ability

PAVESI, Filippo;
2014-01-01

Abstract

We analyze a model of cheap talk in which an expert that faces a conflict of interest with a decision maker is concerned about establishing a reputation for having accurate information. In this environment, an increase in reputation above a certain threshold always makes truthful revelation more difficult to achieve, since experts with greater reputation can more easily sway the beliefs of decision makers in a desired direction. Thus, higher levels of reputation exacerbate the incentives of biased experts to misreport their private information. Decision makers may therefore be better off consulting less reputable experts when conflicts are more pronounced.
2014
Experts, Reputation, Cheap Talk, Conflicts of Interest, Information Transmission
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11562/647551
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