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Strategic consultation in the presence of career concerns

Author

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  • Levy, Gilat

Abstract

In this paper I analyse the strategic interaction of decision makers and their advisers in a consultation process. I find that when agents are concerned about their reputation, consultation results in sub-optimal sharing of information; some decision makers may deliberately act unilaterally and not consult even when advice is costless. When they do consult, decision makers may excessively contradict their adviser’s recommendation. Anticipating it, advisers may not report their information truthfully. These results are obtained without assuming either a tournament or a competition between decision makers and their advisers for wages or a future job.

Suggested Citation

  • Levy, Gilat, 2000. "Strategic consultation in the presence of career concerns," LSE Research Online Documents on Economics 3627, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:3627
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    File URL: https://researchonline.lse.ac.uk/id/eprint/3627/
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    Cited by:

    1. Levy, Gilat, 2004. "Anti-herding and strategic consultation," European Economic Review, Elsevier, vol. 48(3), pages 503-525, June.
    2. Andrea Prat, 2005. "The Wrong Kind of Transparency," American Economic Review, American Economic Association, vol. 95(3), pages 862-877, June.
    3. Levy, Gilat, 2000. "Strategic consultation in the presence of career concerns," LSE Research Online Documents on Economics 3627, London School of Economics and Political Science, LSE Library.
    4. Marco Ottaviani & Peter Norman Sorensen, 2002. "Professional Advice: The Theory of Reputational Cheap Talk," Discussion Papers 02-05, University of Copenhagen. Department of Economics.
    5. Steven D. Levitt & Chad Syverson, 2008. "Market Distortions When Agents Are Better Informed: The Value of Information in Real Estate Transactions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 599-611, November.
    6. repec:dau:papers:123456789/3370 is not listed on IDEAS
    7. Tsung-Sheng Tsai & Yasunari Tamada, 2004. "Allocation of Decision-Making Authority with Principal's Reputation Concerns," Econometric Society 2004 Far Eastern Meetings 701, Econometric Society.

    More about this item

    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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