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Information control in reputational cheap talk

Author

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  • Anbarci, Nejat
  • Ghosh, Saptarshi P.
  • Roy, Jaideep

Abstract

An evaluator estimates as precisely as possible the innate talent of a careerist expert by observing the expert's performance in a prediction task, and has the ability to interfere with the expert's private signal by affecting its precision. The expert on the other hand knows her talent, observes this interference and can misrepresent private beliefs through strategic predictions to enhance her reputation. We show that when priors are significantly uninformative so that the task is a priori hard, the evaluator reduces the precision of the expert's signal, while when priors are significantly informative, he enhances it. We also find that the evaluator's objectives of maximising the precision of information about talent and maximising the probability of ‘truthful expert advice’ in the given task are aligned in and only in a priori hard tasks. We discuss implications of these results for market research decisions by a monopolist facing uncertain demand.

Suggested Citation

  • Anbarci, Nejat & Ghosh, Saptarshi P. & Roy, Jaideep, 2017. "Information control in reputational cheap talk," Games and Economic Behavior, Elsevier, vol. 106(C), pages 153-160.
    • Handle: RePEc:eee:gamebe:v:106:y:2017:i:c:p:153-160
    DOI: 10.1016/j.geb.2017.09.010
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    References listed on IDEAS

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    Cited by:

    1. Robert C. Bird & Vivek Soundararajan, 2020. "The Role of Precontractual Signals in Creating Sustainable Global Supply Chains," Journal of Business Ethics, Springer, vol. 164(1), pages 81-94, June.
    2. Saptarshi P. Ghosh, 2018. "Horses for Courses: Setting Tasks for Spotting Talent," Review of Market Integration, India Development Foundation, vol. 10(3), pages 184-196, December.
    3. Grunewald, Andreas & Kräkel, Matthias, 2022. "Information manipulation and competition," Games and Economic Behavior, Elsevier, vol. 131(C), pages 245-263.

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    More about this item

    Keywords

    Reputational cheap talk; Variance-minimising evaluation; Task difficulty; Information control;
    All these keywords.

    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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