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The Paternalistic Bias of Expert Advice

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  • John P. Lightle

Abstract

Using a theoretical model of noisy expert advice, I show that language inflation can be a rational response to the vagueness of language. Experts will tend to overstate their positions to a like‐minded decision maker (DM) and this constitutes a Pareto improvement over sending a sincere message. When the message space is bounded, overstatement may interfere with the DM's ability to aggregate the experts' information, because communication is less precise when the same message is sent for many states of the world. Despite this, I show that experts are willing to send either the most extreme message to the DM, or a partially overstated message, because by doing so the expert can decrease the likelihood the DM makes a suboptimal decision due to his subjective interpretation of the advice. Because the expert inflates his message toward the policy he believes the DM would be better off choosing, rather than sincerely revealing his information, I refer to this behavior as a paternalistic bias.

Suggested Citation

  • John P. Lightle, 2014. "The Paternalistic Bias of Expert Advice," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(4), pages 876-898, December.
    • Handle: RePEc:bla:jemstr:v:23:y:2014:i:4:p:876-898
    DOI: 10.1111/jems.12070
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    References listed on IDEAS

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    Cited by:

    1. Chlaß, Nadine & Riener, Gerhard, 2015. "Lying, Spying, Sabotaging -- Balancing Means and Aims --," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113222, Verein für Socialpolitik / German Economic Association.
    2. Lightle, John P., 2016. "A rational choice model of the biased recall of information," Economic Modelling, Elsevier, vol. 53(C), pages 487-493.
    3. Chlaß, Nadine & Riener, Gerhard, 2015. "Lying, spying, sabotaging : procedures and consequences," Working Papers 15-17, University of Mannheim, Department of Economics.
    4. Jennifer Brown & Dylan B. Minor, 2012. "Misconduct in Credence Good Markets," NBER Working Papers 18608, National Bureau of Economic Research, Inc.
    5. Miura, Shintaro & Yamashita, Takuro, 2018. "Divergent Interpretation and Divergent Prediction in Communication," TSE Working Papers 18-939, Toulouse School of Economics (TSE).
    6. Jennifer Brown & Dylan Minor, 2015. "Misconduct in Financial Services: Differences across Organizations," Harvard Business School Working Papers 16-022, Harvard Business School.
    7. Randall Holcombe & Dmitry Ryvkin, 2010. "Policy errors in executive and legislative decision-making," Public Choice, Springer, vol. 144(1), pages 37-51, July.

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