Welfare and competition in expert advice markets

Andrea Albertazzi, Matteo Ploner and Federico Vaccari

Journal of Economic Behavior & Organization, 2024, vol. 219, issue C, 74-103

Abstract: We perform a controlled experiment to study the welfare effects of competition within a strategic communication environment. Two equally informed senders with conflicting interests can misreport information at a cost. We compare a treatment where only one sender communicates to a treatment where both senders privately communicate with a decision-maker, all else equal. Data show that competition fails to improve decision-making and harms senders' welfare. As a result, the overall market welfare is significantly lower under competition. In both treatments, senders reveal less information, and decision-makers obtain less than the most informative equilibria predict. However, they still reveal and get more information compared to other equilibria.

Keywords: Experiment; Welfare; Multiple senders; Competition; Sender-receiver games (search for similar items in EconPapers)
JEL-codes: C72 C92 D60 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:219:y:2024:i:c:p:74-103

DOI: 10.1016/j.jebo.2024.01.011

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