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Policy Advice with Imperfectly Informed Experts

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Author Info
Marco Battaglini (Princeton University and CEPR)

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Abstract

We study policy advice by several experts with noisy private information and biased preferences. We highlight a trade-off between the truthfulness of the information revealed by each expert and the number of signals from different experts that can be aggregated to reduce noise. Contrary to models with perfectly informed experts, because of this trade-off, full revelation of information is never possible. However, almost fully efficient information extraction can be obtained in two cases. First, there is an equilibrium in which the outcome converges to the first best benchmark with no asymmetric information as we increase the precision the experts' signals. Second, the inefficiency in communication also converges to zero as the number of experts increases, even when the residual noise in the experts' private signals is large and all the experts have significant and similar (but not necessarily identical) biases.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Advances in Theoretical Economics.

Volume (Year): 4 (2004)
Issue (Month): 1 ()
Pages: 1100-1100
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Handle: RePEc:bep:theadv:v:4:y:2004:i:1:p:1100-1100

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Related research
Keywords: Asymmetric Information Cheap talk Experts.

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Wolinsky, Asher, 2002. "Eliciting information from multiple experts," Games and Economic Behavior, Elsevier, vol. 41(1), pages 141-160, October. [Downloadable!] (restricted)
  2. Matthews, Steven A. & Okuno-Fujiwara, Masahiro & Postlewaite, Andrew, 1991. "Refining cheap-talk equilibria," Journal of Economic Theory, Elsevier, vol. 55(2), pages 247-273, December. [Downloadable!] (restricted)
    Other versions:
    • Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990. "Refining Cheap-Talk Equilibria," Discussion Papers 892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  3. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275R, Cowles Foundation, Yale University, revised Aug 2001. [Downloadable!]
    Other versions:
  4. Robert J. Aumann & Sergiu Hart, 2003. "Long Cheap Talk," Econometrica, Econometric Society, vol. 71(6), pages 1619-1660, November. [Downloadable!] (restricted)
    Other versions:
    • Robert J. Aumann & Sergiu Hart, 2002. "Long Cheap Talk," Discussion Paper Series dp284, Center for Rationality and Interactive Decision Theory, Hebrew University, Jerusalem, revised Nov 2002. [Downloadable!]
  5. Marco Battaglini & Roland Bénabou, 2003. "Trust, Coordination, and the Industrial Organization of Political Activism," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 851-889, 06. [Downloadable!] (restricted)
  6. Dessein, Wouter, 2002. "Authority and Communication in Organizations," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 811-38, October.
  7. Marco Battaglini, 2000. "Multiple Referrals and Multidimensional Cheap Talk," Econometric Society World Congress 2000 Contributed Papers 1557, Econometric Society. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. John M. de Figueiredo & Charles M. Cameron, 2006. "Endogenous Cost Lobbying: Theory and Evidence," Hi-Stat Discussion Paper Series d05-156, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  2. Dezsö Szalay & Ramon Arean, 2005. "Communicating with a Team of Experts," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.12, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
  3. Dino Gerardi & Richard McLean & Andrew Postlewaite, 2005. "Aggregation of Expert Opinions," PIER Working Paper Archive 05-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania. [Downloadable!]
    Other versions:
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