Reputation and information aggregation

Emiliano Catonini and Sergey Stepanov

Journal of Economic Behavior & Organization, 2023, vol. 208, issue C, 156-173

Abstract: We analyze how reputation concerns of a partially informed decision maker affect her ability to extract information from reputation-concerned advisors. Too-high decision maker’s reputation concerns destroy her incentives to seek advice. However, when such concerns are low, she is tempted to solicit advice regardless of her private information, which can undermine advisors’ truth-telling incentives. The optimal strength of the decision maker’s reputation concerns maximizes advice-seeking while preserving advisors’ truth-telling. Prior uncertainty about the state of nature calls for a more reputation-concerned decision maker. Higher expected competence of advisors may worsen information aggregation, unless the decision maker’s reputation concerns are properly adjusted.

Keywords: Reputation concerns; Information aggregation; Advice (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:208:y:2023:i:c:p:156-173

DOI: 10.1016/j.jebo.2023.02.002

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