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Strategic Private Experimentation

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  • Mike Felgenhauer
  • Elisabeth Schulte

Abstract

We present a model in which an agent takes actions to affect her reputation with two audiences with diverse preferences. This contrasts with standard reputation models that consider a homogeneous audience. A new aspect that arises is that different audiences may observe outcomes commonly or separately. We show that, if all audiences commonly observe outcomes, reputation concerns are necessarily efficient- the agent's per-period payoff in the long run is higher than in one-shot play. However, when audiences separately observe different outcomes, the result is the opposite. Therefore, the agent would prefer to deal with audiences commonly. If this is not possible, the second-best solution may be to forgo reputation with one audience and focus entirely on the other.

Suggested Citation

  • Mike Felgenhauer & Elisabeth Schulte, 2014. "Strategic Private Experimentation," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 74-105, November.
    • Handle: RePEc:aea:aejmic:v:6:y:2014:i:4:p:74-105
    Note: DOI: 10.1257/mic.6.4.74
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ying Gao, 2022. "Inference from Selectively Disclosed Data," Papers 2204.07191, arXiv.org, revised Nov 2023.
    2. Alfredo Di Tillio & Marco Ottaviani & Peter Norman Sørensen, 2017. "Persuasion Bias in Science: Can Economics Help?," Economic Journal, Royal Economic Society, vol. 127(605), pages 266-304, October.
    3. Alfredo Di Tillio & Marco Ottaviani & Peter Norman Sørensen, 2021. "Strategic Sample Selection," Econometrica, Econometric Society, vol. 89(2), pages 911-953, March.
    4. Xie, Yinxi & Xie, Yang, 2017. "Machiavellian experimentation," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 685-711.
    5. Elisabeth Schulte & Mike Felgenhauer, 2017. "Preselection and expert advice," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(3), pages 693-714, August.
    6. Herresthal, Claudia, 2022. "Hidden testing and selective disclosure of evidence," Journal of Economic Theory, Elsevier, vol. 200(C).
    7. Felgenhauer, Mike & Xu, Fangya, 2019. "State of the debate contingent arguments," Economics Letters, Elsevier, vol. 179(C), pages 46-48.
    8. Wu, Jiemai, 2020. "Non-competing persuaders," European Economic Review, Elsevier, vol. 127(C).
    9. Vasudha Jain & Mark Whitmeyer, 2021. "Whose Bias?," Papers 2111.10335, arXiv.org.
    10. Martin Paldam, 2013. "Regression Costs Fall, Mining Ratios Rise, Publication Bias Looms, and Techniques Get Fancier: Reflections on Some Trends in Empirical Macroeconomics," Econ Journal Watch, Econ Journal Watch, vol. 10(2), pages 136-156, May.
    11. Federico Echenique & Kevin He, 2021. "Screening $p$-Hackers: Dissemination Noise as Bait," Papers 2103.09164, arXiv.org, revised Mar 2024.
    12. Mike Felgenhauer, 2019. "Endogenous Persuasion with Costly Verification," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1054-1087, July.
    13. Matthias Verbeck & Elisabeth Schulte, 2016. "Contracting with Researchers," MAGKS Papers on Economics 201620, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    14. Qianjun Lyu & Wing Suen, 2023. "Information Design in Cheap Talk," CRC TR 224 Discussion Paper Series crctr224_2023_470, University of Bonn and University of Mannheim, Germany.
    15. Felgenhauer, Mike, 2021. "Experimentation and manipulation with preregistration," Games and Economic Behavior, Elsevier, vol. 130(C), pages 400-408.
    16. Herresthal, C., 2017. "Hidden Testing and Selective Disclosure of Evidence," Cambridge Working Papers in Economics 1712, Faculty of Economics, University of Cambridge.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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