Professional advice

Marco Ottaviani; Peter Norman Sørensen

doi:10.1016/j.jet.2004.08.005

Professional advice

Marco Ottaviani, Peter Norman Sørensen

Department of Economics

84 Citations (Scopus)

Abstract

This paper studies strategic communication by an expert who is concerned about appearing to be well informed. The expert is assumed to observe a private signal with a simple and particularly tractable (multiplicative linear) structure. The quality of the expert's information is evaluated on the basis of the advice given and the realized state of the world. In equilibrium of this reputational cheap-talk game, no more than two messages are effectively reported. The model is extended to consider sequential communication by experts with conditionally independent signals. In the long run, learning is incomplete and herd behavior arises

Original language	English
Journal	Journal of Economic Theory
Volume	126
Issue number	1
Pages (from-to)	120-142
ISSN	0022-0531
DOIs	https://doi.org/10.1016/j.jet.2004.08.005
Publication status	Published - 2006

Keywords

Faculty of Social Sciences
reputation
cheap talk
herding

Access to Document

10.1016/j.jet.2004.08.005

Cite this

@article{c5d36b608a9c11dbbee902004c4f4f50,

title = "Professional advice",

abstract = "This paper studies strategic communication by an expert who is concerned about appearing to be well informed. The expert is assumed to observe a private signal with a simple and particularly tractable (multiplicative linear) structure. The quality of the expert's information is evaluated on the basis of the advice given and the realized state of the world. In equilibrium of this reputational cheap-talk game, no more than two messages are effectively reported. The model is extended to consider sequential communication by experts with conditionally independent signals. In the long run, learning is incomplete and herd behavior arises",

keywords = "Faculty of Social Sciences, reputation, cheap talk, herding",

author = "Marco Ottaviani and S{\o}rensen, {Peter Norman}",

note = "JEL Classification: D82, D83, D72",

year = "2006",

doi = "10.1016/j.jet.2004.08.005",

language = "English",

volume = "126",

pages = "120--142",

journal = "Journal of Economic Theory",

issn = "0022-0531",

publisher = "Academic Press",

number = "1",

}

TY - JOUR

T1 - Professional advice

AU - Ottaviani, Marco

AU - Sørensen, Peter Norman

N1 - JEL Classification: D82, D83, D72

PY - 2006

Y1 - 2006

N2 - This paper studies strategic communication by an expert who is concerned about appearing to be well informed. The expert is assumed to observe a private signal with a simple and particularly tractable (multiplicative linear) structure. The quality of the expert's information is evaluated on the basis of the advice given and the realized state of the world. In equilibrium of this reputational cheap-talk game, no more than two messages are effectively reported. The model is extended to consider sequential communication by experts with conditionally independent signals. In the long run, learning is incomplete and herd behavior arises

AB - This paper studies strategic communication by an expert who is concerned about appearing to be well informed. The expert is assumed to observe a private signal with a simple and particularly tractable (multiplicative linear) structure. The quality of the expert's information is evaluated on the basis of the advice given and the realized state of the world. In equilibrium of this reputational cheap-talk game, no more than two messages are effectively reported. The model is extended to consider sequential communication by experts with conditionally independent signals. In the long run, learning is incomplete and herd behavior arises

KW - Faculty of Social Sciences

KW - reputation

KW - cheap talk

KW - herding

U2 - 10.1016/j.jet.2004.08.005

DO - 10.1016/j.jet.2004.08.005

M3 - Journal article

SN - 0022-0531

VL - 126

SP - 120

EP - 142

JO - Journal of Economic Theory

JF - Journal of Economic Theory

IS - 1

ER -

Professional advice

Abstract

Keywords

Access to Document

Fingerprint

Cite this