The roles of reputation and transparency on the behavior of biased experts
AbstractWe analyze situations in which an expert is biased toward some decision but cares also about his reputation in the market for experts. The information the expert reveals decreases as his bias moves toward stronger preference for the status quo. We show that it is optimal to publicly disclose both the expert's contribution and his identity. Surprisingly, revealing the intensity of the expert's bias doesn't always improve the information he reveals in equilibrium. The presence of a second expert raises the first expert's incentives to report truthfully when reports are public, but reduces them when they are secret. In particular, having an option to call another expert may be detrimental in terms of information production if reports are not public. Finally, sequential consultation of experts reduces the information obtained when reports are public, but raises it when they are secret.
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Bibliographic InfoArticle provided by RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 42 (2011)
Issue (Month): 3 (09)
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Other versions of this item:
- Bourjade, Sylvain & Jullien, Bruno, 2011. "The roles of reputation and transparency on the behavior of biased experts," MPRA Paper 34813, University Library of Munich, Germany.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
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