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A Model of Reputation in Cheap Talk

Author

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  • Lars Frisell
  • Johan N. M. Lagerlöf

Abstract

We study a dynamic game of advice where the sender's preferences are unknown to the receiver. The novel feature of the model is that there is more than one type of biased sender. We show that the more equal the proportions of different biases in the sender population, the greater the credibility of the information transmitted. Somewhat surprisingly, however, we also find that the receiver does not benefit from this equality. We discuss our results in the context of political lobbying and show that institutions that increase transparency lower lobbyists' incentives for truthtelling, but unambiguously promote the policymaker's welfare.

Suggested Citation

  • Lars Frisell & Johan N. M. Lagerlöf, 2007. "A Model of Reputation in Cheap Talk," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(1), pages 49-70, March.
    • Handle: RePEc:bla:scandj:v:109:y:2007:i:1:p:49-70
    DOI: 10.1111/j.1467-9442.2007.00480.x
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    Cited by:

    1. A.K.S. Chand, 2012. "Strategic Information Transmission with Budget Constraint," Working Papers 2012_19, Department of Economics, University of Venice "Ca' Foscari".
    2. Elisabeth Schulte & Mike Felgenhauer, 2017. "Preselection and expert advice," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(3), pages 693-714, August.
    3. Johan Lagerlöf, 2007. "A theory of rent seeking with informational foundations," Economics of Governance, Springer, vol. 8(3), pages 197-218, May.

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