A Model of Expertise
We study a model in which two perfectly informed experts offer advice to a decision maker whose actions affect the welfare of all. Experts are biased and thus may wish to pull the decision maker in different directions and to different degrees. When the decision maker consults only a single expert, the expert withholds substantial information from the decision maker. We ask whether this situation is improved by having the decision maker consult a cabinet of (two) experts. We first show that there is no perfect Bayesian equilibrium in which full revelation occurs. When both experts are biased in the same direction, it is never beneficial to consult both. In contrast, when experts are biased in opposite directions, it is always beneficial to consult both. Finally, a cabinet of extremists is of no value.
|Date of creation:||11 Feb 1999|
|Date of revision:|
|Note:||Type of Document - Latex using Scientific Workplace 3.0; prepared on IBM PC; to print on HP; pages: 33; figures: Three figures drawn in Latex are included in the document.|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
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.:
- Crawford, Vincent P & Sobel, Joel, 1982.
"Strategic Information Transmission,"
Econometric Society, vol. 50(6), pages 1431-51, November.
- Stephen Morris, 2001.
Journal of Political Economy,
University of Chicago Press, vol. 109(2), pages 231-265, April.
- Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990.
"Refining Cheap-Talk Equilibria,"
892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
- Joel Sobel, 1985. "A Theory of Credibility," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 557-573.
- Luis Corchón & Sandeep Baliga & Tomas Sjöström, 1995.
"The Theory Of Implementation When The Planner Is A Player,"
Working Papers. Serie AD
1995-14, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Baliga, Sandeep & Corchon, Luis C. & Sjostrom, Tomas, 1997. "The Theory of Implementation When the Planner Is a Player," Journal of Economic Theory, Elsevier, vol. 77(1), pages 15-33, November.
- Baliga, S. & Corchon, L.C. & Sjostrom, T., 1995. "The Theory of Implemetation when the Planner is a PLayer," Cambridge Working Papers in Economics 9512, Faculty of Economics, University of Cambridge.
- Abhijit Banerjee & Rohini Somanathan, 2001. "A Simple Model of Voice," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 189-227.
- Shin Hyun Song, 1994. "The Burden of Proof in a Game of Persuasion," Journal of Economic Theory, Elsevier, vol. 64(1), pages 253-264, October.
- Morgan, John & Stocken, Phillip C, 2003.
" An Analysis of Stock Recommendations,"
RAND Journal of Economics,
The RAND Corporation, vol. 34(1), pages 183-203, Spring.
- Ezra Friedman, 1998. "Public Debate Among Experts," Discussion Papers 1234, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Green, Jerry R. & Stokey, Nancy L., 2007.
"A two-person game of information transmission,"
Journal of Economic Theory,
Elsevier, vol. 135(1), pages 90-104, July.
- Farrell Joseph, 1993.
"Meaning and Credibility in Cheap-Talk Games,"
Games and Economic Behavior,
Elsevier, vol. 5(4), pages 514-531, October.
- Farrell, Joseph, 1986. "Meaning and Credibility in Cheap-Talk Games," Department of Economics, Working Paper Series qt4968n3fz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- J. Farrell, 2010. "Meaning and Credibility in Cheap Talk Games," Levine's Working Paper Archive 533, David K. Levine.
- Joseph Farrell., 1986. "Meaning and Credibility in Cheap-Talk Games," Economics Working Papers 8609, University of California at Berkeley.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpga:9902003. 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: (EconWPA)
If references are entirely missing, you can add them using this form.