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Confidence and competence in communication

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  • Kohei Kawamura

Abstract

This paper studies information transmission between an uninformed decision maker (receiver) and an informed agent (sender) who have asymmetric beliefs (“confidence”) on the sender’s ability (“competence”) to observe the state of nature. We find that even when the material payoffs of the players are perfectly aligned, the sender’s over- and underconfidence on his information give rise to information loss in communication, although they do not by themselves completely eliminate information transmission in equilibrium. However, an underconfident sender may prefer no communication to informative communication. We also show that when the sender is biased, overconfidence can lead to more information transmission and welfare improvement. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Kohei Kawamura, 2015. "Confidence and competence in communication," Theory and Decision, Springer, vol. 78(2), pages 233-259, February.
    • Handle: RePEc:kap:theord:v:78:y:2015:i:2:p:233-259
    DOI: 10.1007/s11238-014-9416-5
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    Cited by:

    1. Dilmé, Francesc, 2022. "Strategic communication with a small conflict of interest," Games and Economic Behavior, Elsevier, vol. 134(C), pages 1-19.
    2. Szalay, Dezső & Deimen, Inga, 2015. "Information, authority, and smooth communication in organizations," CEPR Discussion Papers 10969, C.E.P.R. Discussion Papers.
    3. Nemanja Antić & Nicola Persico, 2020. "Cheap Talk With Endogenous Conflict of Interest," Econometrica, Econometric Society, vol. 88(6), pages 2663-2695, November.
    4. Lee, Yong-Ju & Lim, Wooyoung & Zhao, Chen, 2023. "Cheap talk with prior-biased inferences," Games and Economic Behavior, Elsevier, vol. 138(C), pages 254-280.
    5. Michele Dell’Era, 2018. "Financial Transaction Taxes and Expert Advice," Working and Discussion Papers WP 4/2018, Research Department, National Bank of Slovakia.

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    More about this item

    Keywords

    Overconfidence; Underconfidence; Communication apprehension; Cheap talk; D03; D83;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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