2004RePEc: Research Papers in EconomicsRequires access

To Disclose or Not to Disclose: Cheap Talk with Uncertain Biases

Ming Li

Open publisher page 14 citations

Abstract

I study strategic information transmission when biases are uncertain. A perfectly informed expert advises a decision maker. The expert has biases with direction unknown to the decision maker. I show that all equilibria are of partitional form as identified by Crawford and Sobel (1982). It never benefits the decision maker or the expert to have the bias of the expert disclosed. The decision maker is better off when the bias distribution is more balanced or when the bias size is smaller.

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I study strategic information transmission when biases are uncertain. A perfectly informed expert advises a decision maker. The expert has biases with direction unknown to the decision maker. I show that all equilibria are of partitional form as identified by Crawford and Sobel (1982). It never benefits the decision maker or the expert to have the bias of the expert disclosed. The decision maker is better off when the bias distribution is more balanced or when the bias size is smaller.

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Available abstract

I study strategic information transmission when biases are uncertain. A perfectly informed expert advises a decision maker. The expert has biases with direction unknown to the decision maker. I show that all equilibria are of partitional form as identified by Crawford and Sobel (1982). It never benefits the decision maker or the expert to have the bias of the expert disclosed. The decision maker is better off when the bias distribution is more balanced or when the bias size is smaller.

Key concepts: Decision maker, Cheap talk, Sobel operator, Distribution (mathematics), Actuarial science, Computer science, Economics, Microeconomics

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