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Forecasts as Repeated Cheap Talk from an Expert of Unknown Statistical Bias

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  • Valsecchi, Irene

Abstract

For two periods an expert E announces his forecast of the state to a decision-maker D who chooses action. They disagree about the precision of the probability assessments. At the end of period 1 the state is observed. In the last period E makes announcements more extreme than his forecasts. Despite countable equilibria, full revelation is never realised. When in period 1 E is interested in reputation only, the initial equilibrium partition is finite; E makes announcements of greater uncertainty with respect to his forecasts. When E is interested in action too, reputational concerns mitigate exaggerated reports.

Suggested Citation

  • Valsecchi, Irene, 2023. "Forecasts as Repeated Cheap Talk from an Expert of Unknown Statistical Bias," FEEM Working Papers 338779, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemwp:338779
    DOI: 10.22004/ag.econ.338779
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    Research Methods/ Statistical Methods;

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