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Reputation for competence in a cheap-talk setting

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  • Lukyanov, Georgy

Abstract

This paper develops a uniform-quadratic cheap-talk setting of Crawford add Sobel (1982), in which the sender may be uninformed and cares about his reputation for competence (that is, for being informed). We establish the existence of a partition equilibrium with two messages and show how this equilibrium is affected when we change the exogenous parameters: the sender’s bias, the initial belief that the sender is competent and the sender’s reputational concerns. We also show that if the reputational concerns are high enough and the sender’s initial reputation is extremely low or extremely high, there exists a fully informative equilibrium in which the competent sender perfectly reveals the state. Possible extensions of the setup are discussed. One possible application of our model might be the interaction between media provider and the public.

Suggested Citation

  • Lukyanov, Georgy, 2023. "Reputation for competence in a cheap-talk setting," Research in Economics, Elsevier, vol. 77(3), pages 285-294.
    • Handle: RePEc:eee:reecon:v:77:y:2023:i:3:p:285-294
    DOI: 10.1016/j.rie.2023.05.001
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    References listed on IDEAS

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    1. Schottmüller, Christoph, 2019. "Too good to be truthful: Why competent advisers are fired," Journal of Economic Theory, Elsevier, vol. 181(C), pages 333-360.
    2. Levy, Gilat, 2004. "Anti-herding and strategic consultation," European Economic Review, Elsevier, vol. 48(3), pages 503-525, June.
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    4. Rahul Deb & Mallesh M. Pai & Maher Said, 2018. "Evaluating Strategic Forecasters," American Economic Review, American Economic Association, vol. 108(10), pages 3057-3103, October.
    5. Aleksei Smirnov & Egor Starkov, 2019. "Timing of predictions in dynamic cheap talk: experts vs. quacks," ECON - Working Papers 334, Department of Economics - University of Zurich.
    6. Camara, Fanny, 2019. "Avoiding Judgement by Recommending Inaction: Beliefs Manipulation and Reputational Concerns," CEPR Discussion Papers 14149, C.E.P.R. Discussion Papers.
    7. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
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    More about this item

    Keywords

    Cheap talk; Reputation; Informativeness;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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