An advice game with reputational and career concerns

Kunio Tsuyuhara ()
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Kunio Tsuyuhara: University of Calgary

Economics Bulletin, 2012, vol. 32, issue 4, 3480-3487

Abstract: I analyze a two-period advice game in which the decision maker chooses to retain or replace the advisor after the first period. The potential replacement creates career concerns for the advisor and thus creates incentives to misinform the decision maker. When the career concern is sufficiently strong, the advisor always lies. I characterize the condition on which the decision maker can induce truthful report by committing to a stochastic retention rule. I show that the decision maker's expected payoff is decreasing with the advisor's level of career concern.

Keywords: Cheap talk; Reputation; Career Concerns (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 2012-12-27
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