Reputational cheap talk

This paper analyzes information reporting by a privately informed expert concerned about being perceived to have accurate information. When the expert’s reputation is updated on the basis of the report as well as the realized state, the expert typically does not wish to truthfully reveal the signal observed. The incentives to deviate from truthtelling are characterized and shown to depend on the information structure. In equilibrium, experts can credibly communicate only part of their information. Our results also hold when experts have private information about their own accuracy and care about their reputation relative to others.

[1]  K. Parthasarathy,et al.  Probability measures on metric spaces , 1967 .

[2]  K. Parthasarathy.  PROBABILITY MEASURES IN A METRIC SPACE , 1967 .

[3]  Victor Zarnowitz,et al.  An appraisal of short-term economic forecasts , 1967 .

[4]  Bengt Holmstrom,et al.  On The Theory of Delegation , 1980 .

[5]  Paul R. Milgrom,et al.  Good News and Bad News: Representation Theorems and Applications , 1981 .

[6]  J. Sobel,et al.  STRATEGIC INFORMATION TRANSMISSION , 1982 .

[7]  Marcel Boyer,et al.  Bayesian Models in Economic Theory , 1984 .

[8]  J. Sobel.  A Theory of Credibility , 1985 .

[9]  Christian Genest,et al.  Combining Probability Distributions: A Critique and an Annotated Bibliography , 1986 .

[10]  Bengt Holmstrom,et al.  Managerial Incentives and Capital Management , 1986 .

[11]  E. Lehmann.  Comparing Location Experiments , 1988 .

[12]  M. J. Bayarri,et al.  Optimal Reporting of Predictions , 1989 .

[13]  J. Geanakoplos,et al.  Psychological games and sequential rationality , 1989 .

[14]  Kent Osband.  Optimal Forecasting Incentives , 1989, Journal of Political Economy.

[15]  D. Scharfstein,et al.  Herd Behavior and Investment , 1990 .

[16]  Daniel J. Seidmann.  Effective cheap talk with conflicting interests , 1990 .

[17]  Eric P. Fox.  Bayesian Statistics 3 , 1991 .

[18]  Guy Laroque,et al.  Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility , 1992 .

[19]  B. Bernheim,et al.  A Theory of Conformity , 1994, Journal of Political Economy.

[20]  Brett Trueman.  Analyst Forecasts and Herding Behavior , 1994 .

[21]  Ben Polak,et al.  When Managers Cover Their Posteriors: Making the Decisions the Market Wants to See , 1996 .

[22]  Lars Stole,et al.  Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning , 1996, Journal of Political Economy.

[23]  M Ottaviani,et al.  Herd behavior and investment: Comment , 2000 .

[24]  Andrea Prat,et al.  The Value of Public Information in Monopoly , 2001 .

[25]  Managerial Incentive Problems: A Dynamic Perspective , 1999 .

[26]  J. Chevalier,et al.  Herding over the career , 1999 .

[27]  J. Tirole,et al.  The economics of career concerns, part I: Comparing information structures , 1999 .

[28]  Robert E. Filman,et al.  Professional advice ∗ , 2004 .

[29]  J. Morgan,et al.  A Model of Expertise , 1999 .

[30]  Marco Battaglini,et al.  Multiple Referrals and Multidimensional Cheap Talk , 2002 .

[31]  P. Sørensen,et al.  Information aggregation in debate: who should speak first? ☆ , 2001 .

[32]  P. Sørensen,et al.  The Strategy of Professional Forecasting , 2001 .

[33]  Eric Zitzewitz.  Opinion-Producing Agents: Career Concerns and Exaggeration , 2001 .

[34]  Mattias Polborn,et al.  Herding and anti-herding: A model of reputational differentiation , 2001 .

[35]  Andrea Prat,et al.  The Wrong Kind of Transparency , 2002 .

[36]  Gilat Levy,et al.  Anti-herding and strategic consultation , 2004 .

[37]  Wei Li.  Mind Changes in the Design of Reporting Protocols , 2004 .

[38]  Joseph Tao-Yi Wang,et al.  Overcommunication in strategic information transmission games , 2006, Games Econ. Behav..

[39]  Marco Ottaviani,et al.  Professional advice ∗ , 2003 .

[40]  Jerry R. Green,et al.  A two-person game of information transmission , 1980, J. Econ. Theory.