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Evasion of guilt in expert advice

Kiryl Khalmetski

Journal of Economic Behavior & Organization, 2019, vol. 167, issue C, 296-310

Abstract: We develop a model of strategic communication between an uninformed receiver and a partially informed sender who is guilt-averse toward the receiver. The sender’s cost of sending a particular message is endogenous, depending on the receiver’s beliefs induced by this message rather than on its exogenous formulation. Such preferences lead to the endogenous emergence of evasive communication in that the sender types who prefer not to reveal their information to the receiver pool with uninformed types rather than with types observing different information. As a result, the receiver may prefer an equilibrium with a smaller amount of messages used on the equilibrium path. Besides, dealing with an ex ante less informed sender can be beneficial to the receiver, while the sender himself may want to commit to a smaller ex ante likelihood of being informed.

Keywords: Guilt aversion; Information transmission; Experts; Psychological game theory (search for similar items in EconPapers)
JEL-codes: D82 D83 D84 C72 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:167:y:2019:i:c:p:296-310

DOI: 10.1016/j.jebo.2019.06.003

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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