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When second opinions hurt: a model of expert advice under career concerns

  • Liu, Yaozhou Franklin
  • Sanyal, Amal

We augment the standard career concerns model by introducing (i) an action that blocks the information about the true state of the world and (ii) a second opinion/interim news after the initial consultation with the expert. In this model, the principal's action as well as the expert's message endogenously determine the observability of the states and consequently, the assessment of the expert's ability by the principal. We show that having access to better interim news could reduce the welfare of the principal due to its strategic effect on the expert's recommendation. We also discuss the implication of the results for possible delegation of decision making to another person with different decision parameters.

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File URL: https://mpra.ub.uni-muenchen.de/36084/1/MPRA_paper_36084.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27176.

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Date of creation: 02 Dec 2010
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Handle: RePEc:pra:mprapa:27176
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