Archishman Chakraborty (Baruch College, City University of New York) Rick Harbaugh (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
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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.
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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.
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
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Find related papers by JEL classification: L0 - Industrial Organization - - General C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
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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.:
Sendhil Mullainathan & Andrei Shleifer, 2005.
"The Market for News,"
American Economic Review,
American Economic Association, vol. 95(4), pages 1031-1053, September.
[Downloadable!]
Simon P. Anderson & Régis Renault, 2006.
"Advertising Content,"
American Economic Review,
American Economic Association, vol. 96(1), pages 93-113, March.
[Downloadable!]
Other versions:
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.
[Downloadable!]
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..
[Downloadable!]