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A Mathematical Model of Communication with Reputational Concerns

Author

Listed:
  • Ce Huang
  • Yuanyuan Zhang
  • Chong Lai

Abstract

We investigate a mathematical model where an expert advises a decision maker for two periods. The decision maker is initially unsure about whether the expert is biased or not. After consulting the expert on the decision problem of period one, the decision maker updates belief about the expert’s bias and consults the expert on the problem of period two. We find that more information is delivered in the model’s first period than in the one‐period situation of communication.

Suggested Citation

  • Ce Huang & Yuanyuan Zhang & Chong Lai, 2016. "A Mathematical Model of Communication with Reputational Concerns," Discrete Dynamics in Nature and Society, John Wiley & Sons, vol. 2016(1).
    • Handle: RePEc:wly:jnddns:v:2016:y:2016:i:1:n:6507104
    DOI: 10.1155/2016/6507104
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    References listed on IDEAS

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    1. Roland Benabou & Guy Laroque, 1992. "Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 921-958.
    2. Sylvain Bourjade & Bruno Jullien, 2011. "The roles of reputation and transparency on the behavior of biased experts," RAND Journal of Economics, RAND Corporation, vol. 42(3), pages 575-594, September.
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