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Confidence and Competence in Communication

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  • Kohei Kawamura

Abstract

This paper studies information transmission between an uninformed decision maker (receiver) and an informed player (sender) who have asymmetric beliefs ("confidence") on the sender's ability ("competence") to observe the state of nature. We find that even when the material payoffs of are perfectly aligned, the sender's over- and underconfidence on his information give rise to information loss in communication, although they do not by themselves completely eliminate information transmission in equilibrium. However, an underconfident sender may prefer no communication to informative communication. We also show that when the sender is biased, overconfidence can lead to more information transmission and welfare improvement.

Suggested Citation

  • Kohei Kawamura, 2013. "Confidence and Competence in Communication," Edinburgh School of Economics Discussion Paper Series 222, Edinburgh School of Economics, University of Edinburgh.
    • Handle: RePEc:edn:esedps:222
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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