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The roles of reputation and transparency on the behavior of biased experts
Author(s) -
Bourjade Sylvain,
Jullien Bruno
Publication year - 2011
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.1756-2171.2011.00146.x
Subject(s) - reputation , transparency (behavior) , incentive , status quo , status quo bias , microeconomics , business , expert system , industrial organization , economics , computer science , artificial intelligence , market economy , political science , law , computer security
We analyze situations in which an expert is biased toward some decision but cares also about his reputation in the market for experts. The information the expert reveals decreases as his bias moves toward stronger preferences for the status quo. Surprisingly, revealing the intensity of the expert’s bias does not always improve the information he reveals in equilibrium. The presence of a second expert raises the first expert’s incentives to report truthfully when the market can identify the contribution of each expert, but reduces them when only the collective contribution is identified by the market.