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Reputation and information aggregation

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  • Catonini, Emiliano
  • Stepanov, Sergey

Abstract

We analyze how reputation concerns of a partially informed decision maker affect her ability to extract information from reputation-concerned advisors. Too-high decision maker’s reputation concerns destroy her incentives to seek advice. However, when such concerns are low, she is tempted to solicit advice regardless of her private information, which can undermine advisors’ truth-telling incentives. The optimal strength of the decision maker’s reputation concerns maximizes advice-seeking while preserving advisors’ truth-telling. Prior uncertainty about the state of nature calls for a more reputation-concerned decision maker. Higher expected competence of advisors may worsen information aggregation, unless the decision maker’s reputation concerns are properly adjusted.

Suggested Citation

  • Catonini, Emiliano & Stepanov, Sergey, 2023. "Reputation and information aggregation," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 156-173.
    • Handle: RePEc:eee:jeborg:v:208:y:2023:i:c:p:156-173
    DOI: 10.1016/j.jebo.2023.02.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Reputation concerns; Information aggregation; Advice;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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