Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/37327
Authors: 
Schulte, Elisabeth
Felgenhauer, Mike
Year of Publication: 
2010
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Asymmetric Information and Incentives A8-V2
Abstract: 
We study the effects of preselection on an expert's incentive to give truthful advice. In a decision environment in which certain decisions yield more precise estimates about the expert's expertise, a mediocre expert's advice is biased. We show that this bias can be undone by the introduction of a preselection stage, where the decision maker himself sometimes studies the case, and thereby alters the expert's perception of the problem. We identify a parameter range in which the decision maker's choice is inefficient if it is not possible to commit to a certain preselection level.
Subjects: 
Reputation
cheap talk
safe haven
JEL: 
D82
D83
D72
Document Type: 
Conference Paper

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