Confidence and Competence in Communication
This paper studies information transmission between an uninformed decision maker (receiver) and an informed player (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 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.
|Date of creation:||Jul 2013|
|Contact details of provider:|| Postal: 31 Buccleuch Place, EH8 9JT, Edinburgh|
Web page: http://www.econ.ed.ac.uk/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nahum D. Melumad & Toshiyuki Shibano, 1991. "Communication in Settings with No. Transfers," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 173-198, Summer.
- Andreas Blume & Oliver Board & Kohei Kawamura, 2007.
ESE Discussion Papers
167, Edinburgh School of Economics, University of Edinburgh.
- Che, Yeon-Koo & Kartik, Navin, 2006.
"Opinion as Incentives,"
6094, University Library of Munich, Germany, revised 15 Nov 2007.
- Anat R. Admati & Paul Pfleiderer, 2004. "Broadcasting Opinions with an Overconfident Sender," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 467-498, 05.
- Cesarini, David & Sandewall, Örjan & Johannesson, Magnus, 2003.
"Confidence Interval Estimation Tasks and the Economics of Overconfidence,"
SSE/EFI Working Paper Series in Economics and Finance
535, Stockholm School of Economics.
- Cesarini, David & Sandewall, Orjan & Johannesson, Magnus, 2006. "Confidence interval estimation tasks and the economics of overconfidence," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 453-470, November.
- Hanming Fang & Giuseppe Moscarini, 2003.
Cowles Foundation Discussion Papers
1422, Cowles Foundation for Research in Economics, Yale University.
- Matthew Gentzkow & Jesse Shapiro, 2005.
"Media Bias and Reputation,"
NBER Working Papers
11664, National Bureau of Economic Research, Inc.
- Kohei Kawamura, 2011. "A Model of Public Consultation: Why is Binary Communication so Common?," Economic Journal, Royal Economic Society, vol. 121(553), pages 819-842, 06.
- Kent Daniel & David Hirshleifer & Avanidhar Subrahmanyam, 1998. "Investor Psychology and Security Market Under- and Overreactions," Journal of Finance, American Finance Association, vol. 53(6), pages 1839-1885, December.
- Krishna, Vijay & Morgan, John, 2004. "The art of conversation: eliciting information from experts through multi-stage communication," Journal of Economic Theory, Elsevier, vol. 117(2), pages 147-179, August.
- Crawford, Vincent P & Sobel, Joel, 1982.
"Strategic Information Transmission,"
Econometric Society, vol. 50(6), pages 1431-1451, November.
- Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
When requesting a correction, please mention this item's handle: RePEc:edn:esedps:222. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gina Reddie)
If references are entirely missing, you can add them using this form.