Forecasts as Repeated Cheap Talk from an Expert of Unknown Statistical Bias

Irene Valsecchi

No 338779, FEEM Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: For two periods an expert E announces his forecast of the state to a decision-maker D who chooses action. They disagree about the precision of the probability assessments. At the end of period 1 the state is observed. In the last period E makes announcements more extreme than his forecasts. Despite countable equilibria, full revelation is never realised. When in period 1 E is interested in reputation only, the initial equilibrium partition is finite; E makes announcements of greater uncertainty with respect to his forecasts. When E is interested in action too, reputational concerns mitigate exaggerated reports.

Keywords: Research; Methods/Statistical; Methods (search for similar items in EconPapers)
Date: 2023-10-26
New Economics Papers: this item is included in nep-gth and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemwp:338779

DOI: 10.22004/ag.econ.338779

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