When Is a Contrarian Adviser Optimal?

Robert Evans and Sönje Reiche

American Economic Journal: Microeconomics, 2023, vol. 15, issue 1, 434-66

Abstract: We compare contrarian to conformist advice, a contrarian expert being one whose preference bias is against the decision-maker's prior optimal decision. Optimality of an expert depends on characteristics of prior information and learning. If either the expert is fully informed or fine information can be acquired cheaply, then for symmetric distributions F of the state, a conformist (contrarian) is superior if F is single peaked (bimodal). If only coarse information can be acquired, then a contrarian acquires more on average and hence is superior. If information is verifiable, a contrarian has less incentive to hide unfavorable evidence and again is superior.

JEL-codes: D72 D82 D83 G34 H71 I12 L94 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/mic.20200204

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