IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v14y2022i4p318-47.html
   My bibliography  Save this article

A Theory of One-Size-Fits-All Recommendations

Author

Listed:
  • Doron Levit
  • Anton Tsoy

Abstract

One-size-fits-all recommendations are common in many contexts, including those with a widespread heterogeneity. We propose a model that rationalizes this phenomenon. An expert recommends publicly to two agents whether to adopt a policy. The expert is privately informed about agents payoffs from the policy and his conflict of interest. We show that one-size-fits-all recommendations can be informative even when payoffs are independent across agents. Such recommendations increase the expert's influence by concealing his conflict of interest. We apply the model to recommendations provided by the IMF, World Bank, proxy advisory firms, central banks, and the Basel Committee.

Suggested Citation

  • Doron Levit & Anton Tsoy, 2022. "A Theory of One-Size-Fits-All Recommendations," American Economic Journal: Microeconomics, American Economic Association, vol. 14(4), pages 318-347, November.
    • Handle: RePEc:aea:aejmic:v:14:y:2022:i:4:p:318-47
    DOI: 10.1257/mic.20200138
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/mic.20200138
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/mic.20200138.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/mic.20200138.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/mic.20200138?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:14:y:2022:i:4:p:318-47. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.