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Credibility for Sale - The Effect of Disclosure on Information Acquisition and Transmission

  • LI, Ming
  • MYLOVANOV, Tymofiy

We study the effect of disclosure on information acquisition and transmission in a dynamic reputation model. In each period, to make a report to a client, an expert chooses between conducting a costly investigation or channeling a message from an interest group. We show that not disclosing the source of the expert's report may increase the frequency of investigation by the expert. Nevertheless, it decreases the quality of the clients' decisions We demonstrate that, however, when the importance of decisions vary across time, when the interest groups are long-lived, or when the expert's clientele is growing in her reputation, nondisclosure may improve the quality of the clients' decisions.

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Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 08-2010.

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Length: 35 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:mtl:montec:08-2010
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  1. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2002. "Imperfect Monitoring and Impermanent Reputations," PIER Working Paper Archive 03-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 30 May 2003.
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  32. Joel Sobel, 1985. "A Theory of Credibility," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 557-573.
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