Vague lies and lax standards of proof: On the law and economics of advice

Mikhail Drugov and Marta Troya‐Martinez

Journal of Economics & Management Strategy, 2019, vol. 28, issue 2, 298-315

Abstract: This paper analyzes a persuasion game where a seller provides (un)biased and (im)precise advice and may be fined by an authority for misleading the buyers. In the equilibrium, biasing the advice and making it noisier are complements. The advice becomes both more biased and less precise with a stricter standard of proof employed by the authority, a larger share of credulous consumers, and a higher buyers' heterogeneity. The optimal policy of the authority is characterized in terms of a standard of proof and resources devoted to the investigation.

Date: 2019
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Citations: View citations in EconPapers (6)

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https://doi.org/10.1111/jems.12279

Related works:
Working Paper: Vague lies and lax standards of proof: On the law and economics of advice (2018)
Working Paper: Vague lies and lax standards of proof: On the law and economics of advice (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:28:y:2019:i:2:p:298-315

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