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To Disclose or Not to Disclose: Cheap Talk with Uncertain Biases

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  • Ming Li

    ()
    (Department of Economics, Concordia University)

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Abstract

I study strategic information transmission when biases are uncertain. A perfectly informed expert advises a decision maker. The expert has biases with direction unknown to the decision maker. I show that all equilibria are of partitional form as identified by Crawford and Sobel (1982). It never benefits the decision maker or the expert to have the bias of the expert disclosed. The decision maker is better off when the bias distribution is more balanced or when the bias size is smaller.

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File URL: http://economics.concordia.ca/documents/working_papers/04003ml.pdf
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Bibliographic Info

Paper provided by Concordia University, Department of Economics in its series Working Papers with number 04003.

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Length: 52 pages
Date of creation: Aug 2003
Date of revision: Aug 2004
Handle: RePEc:crd:wpaper:04003

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Keywords: Cheap Talk; Transparency; Advice.;

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References

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  1. Vijay Krishna & John Morgan, 1999. "A Model of Expertise," Game Theory and Information 9902003, EconWPA.
    • Krishna, V. & Morgan, J., 1999. "A Model of Expertise," Papers 206, Princeton, Woodrow Wilson School - Public and International Affairs.
    • Vijay Krishna & John Morgan, 1999. "A Model of Expertise," Working Papers 154, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
  2. Stephen Morris, 1999. "Political Correctness," Cowles Foundation Discussion Papers 1242, Cowles Foundation for Research in Economics, Yale University.
  3. Wouter Dessein, 2000. "Authority and Communication in Organizations," Econometric Society World Congress 2000 Contributed Papers 1747, Econometric Society.
  4. Benabou, Roland & Laroque, Guy, 1992. "Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 921-58, August.
  5. Farrell, J. & Gibbons, R., 1989. "Cheap Talk With Two Audiences," Working papers 518, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Marco Ottaviani & Peter Sorensen, 1999. "Professional Advice," Game Theory and Information 9906003, EconWPA.
  7. Marco Ottaviani & Francesco Squintani, 2002. "Non-Fully Strategic Information Transmission," Wallis Working Papers WP29, University of Rochester - Wallis Institute of Political Economy.
  8. repec:fth:stanho:e-89-7 is not listed on IDEAS
  9. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November.
  10. Morgan, J. & Stocken, P., 1998. "An Analysis of Stock Recommendations," Papers 204, Princeton, Woodrow Wilson School - Public and International Affairs.
  11. Navin Kartik, 2005. "Information Transmission with Cheap and Almost-Cheap Talk," NajEcon Working Paper Reviews 666156000000000650, www.najecon.org.
  12. Crawford, Vincent P., 2001. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," University of California at San Diego, Economics Working Paper Series qt6k65014s, Department of Economics, UC San Diego.
  13. Blume, Andreas, et al, 1998. "Experimental Evidence on the Evolution of Meaning of Messages in Sender-Receiver Games," American Economic Review, American Economic Association, vol. 88(5), pages 1323-40, December.
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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".

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