Advanced Search
MyIDEAS: Login

Persuasion by Cheap Talk

Contents:

Author Info

  • Archishman Chakraborty

    (Baruch College, City University of New York)

  • Rick Harbaugh

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

We consider the credibility, persuasiveness, and informativeness of multidimensional cheap talk by an expert to a decision maker. We find that an expert with state-independent preferences can always make credible comparative statements that trade off the expert's incentive to exaggerate on each dimension. Such communication benefits the expert -- cheap talk is "persuasive" -- if her preferences are quasiconvex. Communication benefits a decision maker by allowing for a more informed decision, but strategic interactions between multiple decision makers can reverse this gain. We apply these results to topics including media bias, advertising, product recommendations, voting, and auction disclosure.

Download Info

If 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.
File URL: http://www.bus.indiana.edu/riharbau/RePEc/iuk/wpaper/bepp2006-10-chakraborty-harbaugh.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2006-10.

as in new window
Length:
Date of creation: Jun 2006
Date of revision: Oct 2009
Publication status: Forthcoming in American Economic Review
Handle: RePEc:iuk:wpaper:2006-10

Note: Formally circulated as Clearly Biased Experts
Contact details of provider:
Postal: 1309 East Tenth Street, Room 451, Bloomington, IN 47405-1701
Phone: 812-855-9219
Fax: 812-855-3354
Email:
Web page: http://www.bus.indiana.edu/bepp/
More information through EDIRC

Related research

Keywords: multidimensional cheap talk; media bias; stock analysts; comparative advertising; negative advertising; lobbying; transparency;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  2. Stefano DellaVigna & Ethan Kaplan, 2006. "The Fox News Effect: Media Bias and Voting," NBER Working Papers 12169, National Bureau of Economic Research, Inc.
  3. Takahashi, Satoru & Ambrus, Attila, 2008. "Multi-Sender Cheap Talk with Restricted State Spaces," Scholarly Articles 3200263, Harvard University Department of Economics.
  4. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
  5. Green, Paul E & Srinivasan, V, 1978. " Conjoint Analysis in Consumer Research: Issues and Outlook," Journal of Consumer Research, University of Chicago Press, vol. 5(2), pages 103-23, Se.
  6. Martinelli, Cesar, 2002. "Convergence Results for Unanimous Voting," Journal of Economic Theory, Elsevier, vol. 105(2), pages 278-297, August.
  7. Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Li, Ming & Madarász, Kristóf, 2008. "When mandatory disclosure hurts: Expert advice and conflicting interests," Journal of Economic Theory, Elsevier, vol. 139(1), pages 47-74, March.
  9. Morgan, J. & Stocken, P., 1998. "An Analysis of Stock Recommendations," Papers 204, Princeton, Woodrow Wilson School - Public and International Affairs.
  10. 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.
  11. 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..
  12. Polborn, Mattias K. & David T., Yi, 2006. "Informative Positive and Negative Campaigning," International Quarterly Journal of Political Science, now publishers, vol. 1(4), pages 351-371, October.
  13. Simon P. Anderson & R�gis Renault, 2006. "Advertising Content," American Economic Review, American Economic Association, vol. 96(1), pages 93-113, March.
  14. Navin Kartik, 2008. "Strategic Communication with Lying Costs," 2008 Meeting Papers 350, Society for Economic Dynamics.
  15. Archishman Chakraborty & Rick Harbaugh, 2004. "Comparative Cheap Talk," Working Papers 2004-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  16. Bauke Visser & Otto H. Swank, 2005. "On Committees of Experts," Tinbergen Institute Discussion Papers 05-028/1, Tinbergen Institute.
  17. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 231-265, April.
  18. Andrew Caplin & Barry Nalebuff, 1990. "Aggregation and Social Choice: A Mean Voter Theorem," Cowles Foundation Discussion Papers 938, Cowles Foundation for Research in Economics, Yale University.
  19. Gilat Levy, 2007. "Decision Making in Committees: Transparency, Reputation, and Voting Rules," American Economic Review, American Economic Association, vol. 97(1), pages 150-168, March.
  20. Sendhil Mullainathan & Andrei Shleifer, 2002. "Media Bias," Harvard Institute of Economic Research Working Papers 1981, Harvard - Institute of Economic Research.
  21. Coase, R H, 1979. "Payola in Radio and Television Broadcasting," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 269-328, October.
  22. Campbell, Colin M., 1998. "Coordination in Auctions with Entry," Journal of Economic Theory, Elsevier, vol. 82(2), pages 425-450, October.
  23. Navin Kartik, 2005. "Information Transmission with Cheap and Almost-Cheap Talk," NajEcon Working Paper Reviews 666156000000000650, www.najecon.org.
  24. Timothy Feddersen & Wolfgang Pesendorfer, 1996. "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts," Discussion Papers 1170, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  25. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
  26. Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 557-73, October.
  27. Archishman Chakraborty & Nandini Gupta & Rick Harbaugh, 2006. "Best foot forward or best for last in a sequential auction?," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 176-194, 03.
  28. David Spector, 1999. "Rational debate and one-dimensional conflict," Working papers 99-09, Massachusetts Institute of Technology (MIT), Department of Economics.
  29. Matthew Gentzkow & Jesse Shapiro, 2005. "Media Bias and Reputation," NBER Working Papers 11664, National Bureau of Economic Research, Inc.
  30. Paul R. Milgrom & John Roberts, 1984. "Price and Advertising Signals of Product Quality," Cowles Foundation Discussion Papers 709, Cowles Foundation for Research in Economics, Yale University.
  31. Marco Battaglini, 2002. "Multiple Referrals and Multidimensional Cheap Talk," Econometrica, Econometric Society, vol. 70(4), pages 1379-1401, July.
  32. Gilat Levy & Ronny Razin, 2007. "On the Limits of Communication in Multidimensional Cheap Talk: A Comment," Econometrica, Econometric Society, vol. 75(3), pages 885-893, 05.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Christoph Diehl & Christoph Kuzmics, 2013. "The (non-)robustness of influential cheap talk equilibria," Working Papers 489, Bielefeld University, Center for Mathematical Economics.
  2. Midjord, Rune, 2012. "Competitive Pressure and Job Interview Lying: A Game Theoretical Analysis," DFAEII Working Papers 2012-14, University of the Basque Country - Department of Foundations of Economic Analysis II.
  3. Alistair J. Wilson & Emanuel Vespa, 2012. "Communication With Multiple Senders and Multiple Dimensions: An Experiment," Working Papers 384, University of Pittsburgh, Department of Economics, revised Mar 2012.
  4. Sobel, Joel, 2013. "Ten possible experiments on communication and deception," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 408-413.
  5. Alistair J. Wilson & Emanuel Vespa, 2012. "Communication With Multiple Senders and Multiple Dimensions: An Experiment," Working Papers 401, University of Pittsburgh, Department of Economics, revised Mar 2012.
  6. Wonsuk Chung & Rick Harbaugh, 2012. "Biased Recommendations," Working Papers 2012-02, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  7. Florian Hoffmann & Roman Inderst & Marco Ottaviani, 2013. "Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning," Working Papers 479, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  8. Szalay, Dezsö, 2012. "Strategic information transmission and stochastic orders," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 386, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  9. Jindapon, Paan & Oyarzun, Carlos, 2013. "Persuasive communication when the sender's incentives are uncertain," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 111-125.
  10. Ralph Boleslavsky & Tracy R. Lewis, 2011. "Advocacy and Dynamic Delegation," Working Papers 2011-7, University of Miami, Department of Economics.
  11. Archishman Chakraborty & Rick Harbaugh, 2012. "Persuasive Puffery," Working Papers 2012-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  12. Wataru Tamura, 2012. "A Theory of Multidimensional Information Disclosure," ISER Discussion Paper 0828, Institute of Social and Economic Research, Osaka University.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iuk:wpaper:2006-10. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rick Harbaugh).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.