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Pandering to Persuade

Author

Listed:
  • Che, Yeon-Koo
  • Dessein, Wouter
  • Kartik, Navin

Abstract

A principal chooses one of n>=2 projects or an outside option. An agent is privately informed about the projects' benefits and shares the principal's preferences except for not internalizing her value from the outside option. We show that strategic communication is characterized by pandering: the agent biases his recommendation toward good-looking projects--those with appealing observable attributes--even when both parties would be better off with some other project. Projects become more acceptable when pitched against a stronger slate of alternatives. We study organizational responses to the pandering distortion, such as delegation and choosing to be less informed.

Suggested Citation

  • Che, Yeon-Koo & Dessein, Wouter & Kartik, Navin, 2010. "Pandering to Persuade," CEPR Discussion Papers 7970, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7970
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    References listed on IDEAS

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    1. Mark Bagnoli & Ted Bergstrom, 2005. "Log-concave probability and its applications," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(2), pages 445-469, August.
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    Citations

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    Cited by:

    1. Gangopadhyay, Partha, 2014. "Dynamics of mergers, bifurcation and chaos: A new framework," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 403(C), pages 293-307.
    2. Florian Hoffmann & Roman Inderst & Marco Ottaviani, 2013. "Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning," Working Papers 479, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    3. Li, Zhuozheng & Rantakari, Heikki & Yang, Huanxing, 2016. "Competitive cheap talk," Games and Economic Behavior, Elsevier, vol. 96(C), pages 65-89.
    4. Franck Bien & Thomas Lanzi, 2017. "Contracting for information: on the effects of the principal's outside option," Working Papers hal-01491912, HAL.
    5. Chiba, Saori & Leong, Kaiwen, 2015. "An example of conflicts of interest as pandering disincentives," Economics Letters, Elsevier, vol. 131(C), pages 20-23.
    6. repec:eee:jeborg:v:149:y:2018:i:c:p:294-314 is not listed on IDEAS
    7. Raphael Boleslavsky & Christopher Cotton, 2018. "Limited capacity in project selection: competition through evidence production," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 385-421, March.
    8. Hafalir, Isa & Miralles, Antonio, 2015. "Welfare-maximizing assignment of agents to hierarchical positions," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 253-270.
    9. Schmidbauer, Eric, 2017. "Multi-period competitive cheap talk with highly biased experts," Games and Economic Behavior, Elsevier, vol. 102(C), pages 240-254.
    10. repec:eee:jetheo:v:176:y:2018:i:c:p:255-292 is not listed on IDEAS
    11. Wonsuk Chung & Rick Harbaugh, 2012. "Biased Recommendations," Working Papers 2012-02, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    12. Faravelli, Marco & Man, Priscilla & Walsh, Randall, 2015. "Mandate and paternalism: A theory of large elections," Games and Economic Behavior, Elsevier, vol. 93(C), pages 1-23.
    13. Yeon‐Koo Che & Jinwoo Kim & Konrad Mierendorff, 2013. "Generalized Reduced‐Form Auctions: A Network‐Flow Approach," Econometrica, Econometric Society, vol. 81(6), pages 2487-2520, November.
    14. Shapiro, Jesse M., 2016. "Special interests and the media: Theory and an application to climate change," Journal of Public Economics, Elsevier, vol. 144(C), pages 91-108.
    15. Justine S. Hastings & Brigitte C. Madrian & William L. Skimmyhorn, 2013. "Financial Literacy, Financial Education, and Economic Outcomes," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 347-373, May.
    16. Rantakari, Heikki, 2014. "A simple model of project selection with strategic communication and uncertain motives," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 14-42.
    17. Kim, Jin Yeub & Kwon, Heung Jin, 2014. "The strategy of manipulating joint decision-making," Economics Letters, Elsevier, vol. 123(2), pages 127-130.
    18. Eric Schmidbauer, 2016. "Multi-period competitive cheap talk with very biased experts," Working Papers 2016-04, University of Central Florida, Department of Economics.

    More about this item

    Keywords

    Decision processes; Delegation; Multi-dimensional cheap talk; Pandering; Persuasion; Resource allocation;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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