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To Disclose or Not to Disclose: Cheap Talk with Uncertain Biases

Author

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  • Ming Li

    () (Department of Economics, Concordia University)

Abstract

I study strategic information transmission when biases are uncertain. A perfectly informed expert advises a decision maker. The expert has biases with direction unknown to the decision maker. I show that all equilibria are of partitional form as identified by Crawford and Sobel (1982). It never benefits the decision maker or the expert to have the bias of the expert disclosed. The decision maker is better off when the bias distribution is more balanced or when the bias size is smaller.

Suggested Citation

  • Ming Li, 2003. "To Disclose or Not to Disclose: Cheap Talk with Uncertain Biases," Working Papers 04003, Concordia University, Department of Economics, revised Aug 2004.
  • Handle: RePEc:crd:wpaper:04003
    as

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    File URL: http://economics.concordia.ca/documents/working_papers/04003ml.pdf
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    References listed on IDEAS

    as
    1. Navin Kartik, 2005. "Information Transmission with Cheap and Almost-Cheap Talk," NajEcon Working Paper Reviews 666156000000000650, www.najecon.org.
    2. Morgan, John & Stocken, Phillip C, 2003. " An Analysis of Stock Recommendations," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 183-203, Spring.
    3. Farrell, Joseph & Gibbons, Robert, 1989. "Cheap Talk with Two Audiences," American Economic Review, American Economic Association, vol. 79(5), pages 1214-1223, December.
    4. Marco Ottaviani & Francesco Squintani, 2002. "Non-Fully Strategic Information Transmission," Wallis Working Papers WP29, University of Rochester - Wallis Institute of Political Economy.
    5. Wouter Dessein, 2002. "Authority and Communication in Organizations," Review of Economic Studies, Oxford University Press, pages 811-838.
    6. Vincent P. Crawford, 2003. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," American Economic Review, American Economic Association, vol. 93(1), pages 133-149, March.
    7. repec:hoo:wpaper:e-89-7 is not listed on IDEAS
    8. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, pages 231-265.
    9. Blume, Andreas, et al, 1998. "Experimental Evidence on the Evolution of Meaning of Messages in Sender-Receiver Games," American Economic Review, American Economic Association, vol. 88(5), pages 1323-1340, December.
    10. Roland Benabou & Guy Laroque, 1992. "Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 921-958.
    11. Vijay Krishna & John Morgan, 2001. "A Model of Expertise," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 747-775.
    12. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    13. Ottaviani, Marco & Sorensen, Peter Norman, 2006. "Professional advice," Journal of Economic Theory, Elsevier, vol. 126(1), pages 120-142, January.
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    Cited by:

    1. A.K.S. Chand, 2012. "Strategic Information Transmission with Budget Constraint," Working Papers 2012_19, Department of Economics, University of Venice "Ca' Foscari".

    More about this item

    Keywords

    Cheap Talk; Transparency; Advice.;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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