Pub Date : 2024-10-04DOI: 10.1016/j.geb.2024.09.014
P. Jean-Jacques Herings , Yu Zhou
We consider a one-to-one matching with contracts model in the presence of liquidity constraints on the buyer's side. Liquidity constraints can be either soft or hard. Competitive equilibria do exist in economies with soft liquidity constraints, but not necessarily in the presence of hard liquidity constraints. The limit of a convergent sequence of competitive equilibria in economies with increasingly stringent soft liquidity constraints may fail to be a competitive equilibrium in the limit economy with hard liquidity constraints. We establish equivalence and existence results for two alternative notions of competitive equilibrium, quantity-constrained competitive equilibrium and expectational equilibrium, together with stable outcomes and core outcomes, in economies with both types of liquidity constraints. We argue that these notions of equilibrium and stability do not suffer from discontinuity problems by showing appropriate limit results.
{"title":"Equilibria in matching markets with soft and hard liquidity constraints","authors":"P. Jean-Jacques Herings , Yu Zhou","doi":"10.1016/j.geb.2024.09.014","DOIUrl":"10.1016/j.geb.2024.09.014","url":null,"abstract":"<div><div>We consider a one-to-one matching with contracts model in the presence of liquidity constraints on the buyer's side. Liquidity constraints can be either soft or hard. Competitive equilibria do exist in economies with soft liquidity constraints, but not necessarily in the presence of hard liquidity constraints. The limit of a convergent sequence of competitive equilibria in economies with increasingly stringent soft liquidity constraints may fail to be a competitive equilibrium in the limit economy with hard liquidity constraints. We establish equivalence and existence results for two alternative notions of competitive equilibrium, quantity-constrained competitive equilibrium and expectational equilibrium, together with stable outcomes and core outcomes, in economies with both types of liquidity constraints. We argue that these notions of equilibrium and stability do not suffer from discontinuity problems by showing appropriate limit results.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 264-278"},"PeriodicalIF":1.0,"publicationDate":"2024-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142424223","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-02DOI: 10.1016/j.geb.2024.09.009
Zhonghong Kuang , Hangcheng Zhao , Jie Zheng
Two privately informed contestants compete in a contest, and the organizer ex-ante designs a public anonymous disclosure policy to maximize the contestants' total effort. We fully characterize ridge distributions, under which the organizer achieves the first-best outcome in equilibrium: the allocation is efficient, and the entire surplus goes to the organizer. When the prior is a mixture of a ridge distribution and a perfectly correlated distribution, the first-best outcome is achievable by a signal that solely generates ridge distributions as posteriors.
{"title":"Ridge distributions and information design in simultaneous all-pay auction contests","authors":"Zhonghong Kuang , Hangcheng Zhao , Jie Zheng","doi":"10.1016/j.geb.2024.09.009","DOIUrl":"10.1016/j.geb.2024.09.009","url":null,"abstract":"<div><div>Two privately informed contestants compete in a contest, and the organizer ex-ante designs a public anonymous disclosure policy to maximize the contestants' total effort. We fully characterize ridge distributions, under which the organizer achieves the first-best outcome in equilibrium: the allocation is efficient, and the entire surplus goes to the organizer. When the prior is a mixture of a ridge distribution and a perfectly correlated distribution, the first-best outcome is achievable by a signal that solely generates ridge distributions as posteriors.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 218-243"},"PeriodicalIF":1.0,"publicationDate":"2024-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142424221","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-02DOI: 10.1016/j.geb.2024.09.012
Yingjie Niu , Zhentao Zou
We develop a continuous-time dynamic multi-agent contracting model in which the principal is unsure about the distributions of the project's terminal payoffs and worries about model misspecification. With model uncertainty, workers' wages depend on the outputs of other unrelated projects and the optimal contracts exhibit overdetermination. We demonstrate an inverse U-shaped relationship between the extent of overdetermination and group size. Moreover, model uncertainty induces wage compression, especially in small firms as the empirical evidence demonstrates. Finally, expanding the group size increases the average project value by mitigating the negative impacts of ambiguity.
我们建立了一个连续时间动态多代理合同模型，在这个模型中，委托人不确定项目最终收益的分布，并担心模型的错误规范。在模型不确定的情况下，工人的工资取决于其他无关项目的产出，最优合同表现出过度确定性。我们证明了过度决定的程度与群体规模之间的反 U 型关系。此外，正如经验证据所证明的那样，模型的不确定性会导致工资压缩，尤其是在小企业中。最后，扩大集团规模可以减轻不确定性的负面影响，从而增加项目的平均价值。
{"title":"Robust dynamic contracts with multiple agents","authors":"Yingjie Niu , Zhentao Zou","doi":"10.1016/j.geb.2024.09.012","DOIUrl":"10.1016/j.geb.2024.09.012","url":null,"abstract":"<div><div>We develop a continuous-time dynamic multi-agent contracting model in which the principal is unsure about the distributions of the project's terminal payoffs and worries about model misspecification. With model uncertainty, workers' wages depend on the outputs of other unrelated projects and the optimal contracts exhibit overdetermination. We demonstrate an inverse U-shaped relationship between the extent of overdetermination and group size. Moreover, model uncertainty induces wage compression, especially in small firms as the empirical evidence demonstrates. Finally, expanding the group size increases the average project value by mitigating the negative impacts of ambiguity.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 196-217"},"PeriodicalIF":1.0,"publicationDate":"2024-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142424226","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-02DOI: 10.1016/j.geb.2024.09.011
Nicolas Jacquemet , Stéphane Luchini , Jason F. Shogren , Adam Zylbersztejn
Under incomplete contracts, the mutual belief in reciprocity facilitates how traders create value through economic exchange. Creating such beliefs among strangers can be challenging even when they are allowed to communicate, because communication is cheap. In this paper, we first extend the literature showing that a truth-telling oath increases honesty to a sequential trust game with pre-play, fixed-form, and cheap-talk communication. Our results confirm that the oath creates more trust and cooperative behavior thanks to an improvement in communication; but we also show that the oath induces selection into communication — it makes people more wary of using communication, precisely because communication speaks louder under oath. We next designed additional treatments featuring mild and deterrent fines for deception to measure the monetary equivalent of the non-monetary incentives implemented by a truth-telling oath. We find that the oath is behaviorally equivalent to mild fines. The deterrent fine induces the highest level of cooperation. Altogether, these results confirm that allowing for interactions under oath within a trust game with communication creates significantly more economic value than the identical exchange institutions without the oath.
{"title":"Commitment to the truth creates trust in market exchange: Experimental evidence","authors":"Nicolas Jacquemet , Stéphane Luchini , Jason F. Shogren , Adam Zylbersztejn","doi":"10.1016/j.geb.2024.09.011","DOIUrl":"10.1016/j.geb.2024.09.011","url":null,"abstract":"<div><div>Under incomplete contracts, the mutual belief in reciprocity facilitates how traders create value through economic exchange. Creating such beliefs among strangers can be challenging even when they are allowed to communicate, because communication is cheap. In this paper, we first extend the literature showing that a truth-telling oath increases honesty to a sequential trust game with pre-play, fixed-form, and cheap-talk communication. Our results confirm that the oath creates more trust and cooperative behavior thanks to an improvement in communication; but we also show that the oath induces selection into communication — it makes people more wary of using communication, precisely because communication speaks louder under oath. We next designed additional treatments featuring mild and deterrent fines for deception to measure the monetary equivalent of the non-monetary incentives implemented by a truth-telling oath. We find that the oath is behaviorally equivalent to mild fines. The deterrent fine induces the highest level of cooperation. Altogether, these results confirm that allowing for interactions under oath within a trust game with communication creates significantly more economic value than the identical exchange institutions without the oath.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 279-295"},"PeriodicalIF":1.0,"publicationDate":"2024-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142424222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-27DOI: 10.1016/j.geb.2024.09.003
Coralio Ballester , Antonio Rodriguez-Moral , Marc Vorsatz
The cognitive reflection test or CRT (Frederick, 2005) has been found to be a reliable predictor of the degree of strategic sophistication of subjects in a variety of laboratory experiments. These studies have found that subjects who score higher in the CRT make choices that are closer to Nash equilibrium (i.e., Brañas-Garza et al., 2012). In an extended level-k model with free subjective beliefs, we theoretically decompose the closeness to equilibrium for the class of anchored guessing games introduced in Ballester et al. (2023) into two effects: subjects with a smaller distance to equilibrium must possess a higher reasoning level in the level-k hierarchy or their level-k iteration process must begin from a starting point (called “seed”) that is inherently more advantageously positioned, which translates into the concept of “seed distance” (or both). Our main experimental finding is that subjects with a higher CRT score play closer to equilibrium due to the fact that they iterate more often in their reasoning process (as in Brañas-Garza et al., 2012), yet we find no clear evidence that they have a smaller seed distance. We also find evidence of a learning or adaptation process, which can be characterized by a warm-up phase (in which subjects reduce their seed distance), followed by a learning phase (in which they increase their reasoning level, at a faster rate in subjects with higher CRT) and then a saturation phase in which no further improvements are made.
{"title":"Cognitive reflection in experimental anchored guessing games","authors":"Coralio Ballester , Antonio Rodriguez-Moral , Marc Vorsatz","doi":"10.1016/j.geb.2024.09.003","DOIUrl":"10.1016/j.geb.2024.09.003","url":null,"abstract":"<div><div>The cognitive reflection test or CRT (<span><span>Frederick, 2005</span></span>) has been found to be a reliable predictor of the degree of strategic sophistication of subjects in a variety of laboratory experiments. These studies have found that subjects who score higher in the CRT make choices that are closer to Nash equilibrium (i.e., <span><span>Brañas-Garza et al., 2012</span></span>). In an extended level-<em>k</em> model with free subjective beliefs, we theoretically decompose the closeness to equilibrium for the class of anchored guessing games introduced in <span><span>Ballester et al. (2023)</span></span> into two effects: subjects with a smaller distance to equilibrium must possess a higher reasoning level in the level-<em>k</em> hierarchy or their level-<em>k</em> iteration process must begin from a starting point (called “seed”) that is inherently more advantageously positioned, which translates into the concept of “seed distance” (or both). Our main experimental finding is that subjects with a higher CRT score play closer to equilibrium due to the fact that they iterate more often in their reasoning process (as in <span><span>Brañas-Garza et al., 2012</span></span>), yet we find no clear evidence that they have a smaller seed distance. We also find evidence of a learning or adaptation process, which can be characterized by a warm-up phase (in which subjects reduce their seed distance), followed by a learning phase (in which they increase their reasoning level, at a faster rate in subjects with higher CRT) and then a saturation phase in which no further improvements are made.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 179-195"},"PeriodicalIF":1.0,"publicationDate":"2024-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142424225","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-24DOI: 10.1016/j.geb.2024.09.006
Antonio Cabrales , Esther Hauk
In this paper, we model the interaction between leaders, their followers and crowd followers in a coordination game with local interaction. The steady states of a dynamic best-response process can feature a coexistence of Pareto-dominant and risk-dominant actions in the population. The existence of leaders and their followers, along with the local interaction, which leads to clustering, is crucial for the survival of the Pareto-dominant actions. The evolution of leader and crowd followership shows that leader followership can also be locally stable around Pareto-dominant leaders. The paper answers the questions of which leader should be removed and how to optimally place leaders in the network to enhance payoff-dominant play.
{"title":"Norms and the evolution of leaders' followership","authors":"Antonio Cabrales , Esther Hauk","doi":"10.1016/j.geb.2024.09.006","DOIUrl":"10.1016/j.geb.2024.09.006","url":null,"abstract":"<div><div>In this paper, we model the interaction between leaders, their followers and crowd followers in a coordination game with local interaction. The steady states of a dynamic best-response process can feature a coexistence of Pareto-dominant and risk-dominant actions in the population. The existence of leaders and their followers, along with the local interaction, which leads to clustering, is crucial for the survival of the Pareto-dominant actions. The evolution of leader and crowd followership shows that leader followership can also be locally stable around Pareto-dominant leaders. The paper answers the questions of which leader should be removed and how to optimally place leaders in the network to enhance payoff-dominant play.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 138-161"},"PeriodicalIF":1.0,"publicationDate":"2024-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142319710","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-23DOI: 10.1016/j.geb.2024.09.002
Haimanti Bhattacharya, Subhasish Dugar
Evidence on the combined effects of threats and retaliations on bargainers' payoffs from actual marketplaces is scarce. We conduct a natural field experiment in a marketplace where buyers employ verbal threats to negotiate discounts, while sellers can covertly retaliate with fraudulent actions that may negatively affect buyers' payoffs. By varying the threat levels, we find that seller retaliations intensify as the threat level escalates, which more than offset any gains buyers make from negotiating discounts. Our finding highlights that in marketplaces where covert retaliations are feasible, the party employing threats in the bargaining process receives lower financial payoffs than in the absence of any threat, and the payoff declines with an increase in threat intensity. Our finding is particularly relevant for credence goods markets, where sellers may be inclined to intensify undertreatment in response to threats from buyers.
{"title":"Can threats improve payoffs from bargaining in markets with retaliations? Evidence from a field experiment","authors":"Haimanti Bhattacharya, Subhasish Dugar","doi":"10.1016/j.geb.2024.09.002","DOIUrl":"10.1016/j.geb.2024.09.002","url":null,"abstract":"<div><div>Evidence on the combined effects of threats and retaliations on bargainers' payoffs from actual marketplaces is scarce. We conduct a natural field experiment in a marketplace where buyers employ verbal threats to negotiate discounts, while sellers can covertly retaliate with fraudulent actions that may negatively affect buyers' payoffs. By varying the threat levels, we find that seller retaliations intensify as the threat level escalates, which more than offset any gains buyers make from negotiating discounts. Our finding highlights that in marketplaces where covert retaliations are feasible, the party employing threats in the bargaining process receives lower financial payoffs than in the absence of any threat, and the payoff declines with an increase in threat intensity. Our finding is particularly relevant for credence goods markets, where sellers may be inclined to intensify undertreatment in response to threats from buyers.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 119-137"},"PeriodicalIF":1.0,"publicationDate":"2024-09-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142316016","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-22DOI: 10.1016/j.geb.2024.09.005
Rustamdjan Hakimov , Agne Kajackaite
This paper studies whether malfunctioning (or unenforced) institutions erode good behavior. We use a large-scale online experiment, in which participants play a repeated observed cheating game. When we ask participants to report honestly and promise no control, we find low cheating rates. When control of truthful reporting is introduced, low cheating rates remain. In our main treatment with a malfunctioning institution, participants do not know whether they are in the treatment with or without control. In this treatment, participants who do not face control for some rounds start cheating significantly more often, reaching highest cheating rates. That is, a malfunctioning institution leads to more cheating than no institution at all, which indicates that the development of cheating behavior is endogenous to the institutions. Our findings suggest a novel negative effect of unenforced laws.
{"title":"Breaking bad: Malfunctioning control institutions erode good behavior in a cheating game","authors":"Rustamdjan Hakimov , Agne Kajackaite","doi":"10.1016/j.geb.2024.09.005","DOIUrl":"10.1016/j.geb.2024.09.005","url":null,"abstract":"<div><div>This paper studies whether malfunctioning (or unenforced) institutions erode good behavior. We use a large-scale online experiment, in which participants play a repeated observed cheating game. When we ask participants to report honestly and promise no control, we find low cheating rates. When control of truthful reporting is introduced, low cheating rates remain. In our main treatment with a malfunctioning institution, participants do not know whether they are in the treatment with or without control. In this treatment, participants who do not face control for some rounds start cheating significantly more often, reaching highest cheating rates. That is, a malfunctioning institution leads to more cheating than no institution at all, which indicates that the development of cheating behavior is endogenous to the institutions. Our findings suggest a novel negative effect of unenforced laws.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 162-178"},"PeriodicalIF":1.0,"publicationDate":"2024-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142322478","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-19DOI: 10.1016/j.geb.2024.09.004
Gregory Z. Gutin , Philip R. Neary , Anders Yeo
In this paper we consider stable matchings subject to assignment constraints. These are matchings that require certain assigned pairs to be included, insist that some other assigned pairs are not, and, importantly, are stable. Our main contribution is an algorithm, based on the iterated deletion of unattractive alternatives (Balinski and Ratier, 1997; Gutin et al., 2023), that determines if and when a given list of constraints is compatible with stability. Whenever there is a stable matching that satisfies the constraints, our algorithm outputs all of them (each in polynomial time per solution). This provides market designers with (i) a tool to test the feasibility of stable matchings subject to assignment constraints, and (ii) a tool to implement them when feasible.
{"title":"Finding all stable matchings with assignment constraints","authors":"Gregory Z. Gutin , Philip R. Neary , Anders Yeo","doi":"10.1016/j.geb.2024.09.004","DOIUrl":"10.1016/j.geb.2024.09.004","url":null,"abstract":"<div><div>In this paper we consider stable matchings subject to assignment constraints. These are matchings that require certain assigned pairs to be included, insist that some other assigned pairs are not, and, importantly, are stable. Our main contribution is an algorithm, based on the iterated deletion of unattractive alternatives (<span><span>Balinski and Ratier, 1997</span></span>; <span><span>Gutin et al., 2023</span></span>), that determines if and when a given list of constraints is compatible with stability. Whenever there is a stable matching that satisfies the constraints, our algorithm outputs all of them (each in polynomial time per solution). This provides market designers with (i) a tool to test the feasibility of stable matchings subject to assignment constraints, and (ii) a tool to implement them when feasible.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 244-263"},"PeriodicalIF":1.0,"publicationDate":"2024-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142424224","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-18DOI: 10.1016/j.geb.2024.09.001
Inés Moreno de Barreda
This paper studies how the transmission of information from a biased expert to a decision maker is affected when the latter has access to an unbiased symmetric private signal. The extra information has two distinct effects on the expert's incentives to communicate. First, there is an information effect that allows the decision maker to choose a better action on expectation. This reduces the implicit cost of transmitting coarse messages and hence hampers communication. Second, there is a risk effect that arises because the extra information introduces uncertainty to the expert. For risk averse experts, this effect increases the cost of sending coarse messages and hence favours communication. I show that the information effect dominates the risk effect, and for any symmetric signal structure there are always sufficiently biased experts for which communication is no longer possible in equilibrium. Moreover, for any bias of the expert, no communication is possible if the signal structure is sufficiently precise. For the uniform signal structure I show that communication decreases with the precision of the signal. Finally, I provide non degenerate examples for which the decision maker's private information cannot make up for the loss of communication implying that the welfare of both agents decreases.
{"title":"Cheap talk with two-sided private information","authors":"Inés Moreno de Barreda","doi":"10.1016/j.geb.2024.09.001","DOIUrl":"10.1016/j.geb.2024.09.001","url":null,"abstract":"<div><div>This paper studies how the transmission of information from a biased expert to a decision maker is affected when the latter has access to an unbiased symmetric private signal. The extra information has two distinct effects on the expert's incentives to communicate. First, there is an <em>information effect</em> that allows the decision maker to choose a better action on expectation. This reduces the implicit cost of transmitting coarse messages and hence hampers communication. Second, there is a <em>risk effect</em> that arises because the extra information introduces uncertainty to the expert. For risk averse experts, this effect increases the cost of sending coarse messages and hence favours communication. I show that the information effect dominates the risk effect, and for any symmetric signal structure there are always sufficiently biased experts for which communication is no longer possible in equilibrium. Moreover, for any bias of the expert, no communication is possible if the signal structure is sufficiently precise. For the uniform signal structure I show that communication decreases with the precision of the signal. Finally, I provide non degenerate examples for which the decision maker's private information cannot make up for the loss of communication implying that the welfare of both agents decreases.</div></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"148 ","pages":"Pages 97-118"},"PeriodicalIF":1.0,"publicationDate":"2024-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0899825624001337/pdfft?md5=88cffbae938e2d6268cfc7bbad689c4f&pid=1-s2.0-S0899825624001337-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142257447","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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