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Decision Rules for Experts with Opposing Interests

  • Tymofiy Mylovanov

    ()

    (Penn State University)

  • Andriy Zapechelnyuk

    (Queen Mary, University of London)

This paper studies optimal decision rules for a decision maker who can consult two experts in an environment without monetary payments. This extends the previous work by Holmstr�m (1984) and Alonso and Matouschek (2008) who consider environments with one expert. In order to derive optimal decision rules, we prove a "constant-threat" result that states that any out-of-equilibrium pair of recommendations by the experts are punished with an action that is independent of their reports. A particular property of an optimal decision rule is that it is simple and constant for a large set of experts' preferences and distribution of their private information. Hence, it is robust in the sense that it is not affected by errors in specifying these features of the environment. By contrast, the constructions of optimal outcomes absent commitment or with only one expert are sensitive to model details.

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File URL: http://www.econ.qmul.ac.uk/papers/doc/wp674.pdf
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Paper provided by Queen Mary University of London, School of Economics and Finance in its series Working Papers with number 674.

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Date of creation: Nov 2010
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Handle: RePEc:qmw:qmwecw:wp674
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  13. Ehud Kalai & Robert W. Rosenthal, 1976. "Arbitration of Two-Party Disputes Under Ignorance," Discussion Papers 215, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  18. Kovác, Eugen & Mylovanov, Tymofiy, 2009. "Stochastic mechanisms in settings without monetary transfers: The regular case," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1373-1395, July.
  19. repec:ebl:ecbull:v:3:y:2008:i:63:p:1-8 is not listed on IDEAS
  20. Asher Wolinsky, 1999. "Eliciting Information From Multiple Experts," Discussion Papers 1277, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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