Expertise and Bias in Decision Making

Sylvain Bourjade () and Bruno JULLIEN ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we develop a model of a decision maker using an expert to obtain information. The expert is biased toward some favoured decision but cares also about its reputation on the market for experts. We then analyse the corresponding decision game depending on the nature of the informational linkage with the market. In the case where the expert is biased in favour of the status quo, the final decision is always biased in the same direction. Moreover, it is better to rely on experts biased against the status quo. We also show that it is optimal to publically disclose the expert report. Finally, we prove that the intuitive results that hiring an honest inside expert raises the outside expert's incentives to report truthfully holds when reports are public but not when they are secret.

Keywords: Experts; Bias; Reputation; Merger Control (search for similar items in EconPapers)
JEL-codes: D82 L40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-cta
Date: 2004-11, Revised 2007-01
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:7251

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