When second opinions hurt: a model of expert advice under career concerns

Liu, Yaozhou Franklin and Sanyal, Amal (2010): When second opinions hurt: a model of expert advice under career concerns.

Abstract

We augment the standard career concerns model by introducing (i) an action that blocks the information about the true state of the world and (ii) a second opinion/interim news after the initial consultation with the expert. In this model, the principal's action as well as the expert's message endogenously determine the observability of the states and consequently, the assessment of the expert's ability by the principal. We show that having access to better interim news could reduce the welfare of the principal due to its strategic effect on the expert's recommendation. We also discuss the implication of the results for possible delegation of decision making to another person with different decision parameters.

• Item Type: MPRA Paper
• Language: English
• Keywords: Career Concern; Reputational Cheaptalk; Signaling Game
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness

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