Multiple Advisors with Reputation
AbstractThis paper examines reputation, the belief of a decision maker about types of advisors, in a two period cheap talk model where the decision maker obtains messages from two advisors. The decision maker believes that an advisor can be one of two types - an advisor who is biased towards suggesting any particular advice (bad advisor) or an advisor who has the same preferences as the decision maker (good advisor). I assume that each advisor perfectly knows the type of the other advisor, but his signal about the state of the world is imperfect. Strong reputational concern makes the good advisor sometimes tell a lie in the first period regardless of the type of the other advisor. It is shown that the presence of the other advisor does affect the message sent by an advisor. The good advisor has a greater incentive to tell a lie when he knows that the other advisor is bad rather than good. If each type of advisor considers his second period sufficiently important, it is better for the decision maker to have a single advisor.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp314.
Date of creation: Dec 2006
Date of revision:
Contact details of provider:
Postal: P.O. Box 882, Politickych veznu 7, 111 21 Praha 1
Phone: (+420) 224 005 123
Fax: (+420) 224 005 333
Web page: http://www.cerge-ei.cz
More information through EDIRC
Reputation; Cheap talk;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-23 (All new papers)
- NEP-CBA-2007-01-23 (Central Banking)
- NEP-MAC-2007-01-23 (Macroeconomics)
- NEP-MON-2007-01-23 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marco Battaglini, 2000.
"Multiple Referrals and Multidimensional Cheap Talk,"
Econometric Society World Congress 2000 Contributed Papers
1557, Econometric Society.
- Marco Battaglini, 2002. "Multiple Referrals and Multidimensional Cheap Talk," Econometrica, Econometric Society, vol. 70(4), pages 1379-1401, July.
- Marco Battaglini, 1999. "Multiple Referrals and Multidimensional Cheap Talk," Discussion Papers 1295, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Stephen Morris, 1999.
Cowles Foundation Discussion Papers
1242, Cowles Foundation for Research in Economics, Yale University.
- Jeffrey C. Ely & Juuso Valimaki, 2002.
1348, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Paul Milgrom & John Roberts, 1980.
"Predation, Reputation, and Entry Deterrence,"
427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Olszewski, Wojciech, 2004. "Informal communication," Journal of Economic Theory, Elsevier, vol. 117(2), pages 180-200, August.
- Marco Ottaviani & Peter Sorensen, 1999.
Game Theory and Information
- Battaglini Marco, 2004. "Policy Advice with Imperfectly Informed Experts," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-34, April.
- David Kreps & Robert Wilson, 1999.
"Reputation and Imperfect Information,"
Levine's Working Paper Archive
238, David K. Levine.
- In-Uck Park, 2005. "Cheap-Talk Referrals of Differentiated Experts in Repeated Relationships," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 391-411, Summer.
- Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 557-73, October.
- Levy, Gilat & Razin, Ronny, 2004.
"Multidimensional Cheap Talk,"
CEPR Discussion Papers
4393, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jana Koudelkova).
If references are entirely missing, you can add them using this form.