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A Model of Expertise

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Author Info
Vijay Krishna (Penn State University)
John Morgan (Princeton University)

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Abstract

We study a model in which two perfectly informed experts offer advice to a decision maker whose actions affect the welfare of all. Experts are biased and thus may wish to pull the decision maker in different directions and to different degrees. When the decision maker consults only a single expert, the expert withholds substantial information from the decision maker. We ask whether this situation is improved by having the decision maker consult a cabinet of (two) experts. We first show that there is no perfect Bayesian equilibrium in which full revelation occurs. When both experts are biased in the same direction, it is never beneficial to consult both. In contrast, when experts are biased in opposite directions, it is always beneficial to consult both. Finally, a cabinet of extremists is of no value.

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Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 9902003.

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Length: 33 pages
Date of creation: 11 Feb 1999
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Handle: RePEc:wpa:wuwpga:9902003

Note: Type of Document - Latex using Scientific Workplace 3.0; prepared on IBM PC; to print on HP; pages: 33; figures: Three figures drawn in Latex are included in the document.
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Web page: http://129.3.20.41

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Related research
Keywords: Information; experts; cheap talk.;

Other versions of this item:

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

References listed on IDEAS
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  1. Farrell, Joseph & Rabin, Matthew, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-18, Summer. [Downloadable!] (restricted)
  2. Baliga, Sandeep & Corchon, Luis C. & Sjostrom, Tomas, 1997. "The Theory of Implementation When the Planner Is a Player," Journal of Economic Theory, Elsevier, vol. 77(1), pages 15-33, November. [Downloadable!] (restricted)
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  3. Shin Hyun Song, 1994. "The Burden of Proof in a Game of Persuasion," Journal of Economic Theory, Elsevier, vol. 64(1), pages 253-264, October. [Downloadable!] (restricted)
  4. Morgan, J. & Stocken, P., 1998. "An Analysis of Stock Recommendations," Papers 204, Princeton, Woodrow Wilson School - Public and International Affairs.
    Other versions:
  5. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring. [Downloadable!] (restricted)
    Other versions:
  6. Stephen Morris, 1999. "Political Correctness," Cowles Foundation Discussion Papers 1242, Cowles Foundation, Yale University. [Downloadable!]
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  7. Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990. "Refining Cheap-Talk Equilibria," Discussion Papers 892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    Other versions:
  8. Jerry R. Green & Nancy L. Stokey, 1980. "A Two-Person Game of Information Transmission," Discussion Papers 418, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  9. Joseph Farrell., 1986. "Meaning and Credibility in Cheap-Talk Games," Economics Working Papers 8609, University of California at Berkeley.
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  10. Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Blackwell Publishing, vol. 52(4), pages 557-73, October. [Downloadable!] (restricted)
  11. Ezra Friedman, 1998. "Public Debate Among Experts," Discussion Papers 1234, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  12. Abhijit Banerjee & Rohini Somanathan, 2001. "A Simple Model Of Voice," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 189-227, February. [Downloadable!] (restricted)
  13. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November. [Downloadable!] (restricted)
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