Confidence and competence in communication

Kohei Kawamura ()

Theory and Decision, 2015, vol. 78, issue 2, 233-259

Abstract: This paper studies information transmission between an uninformed decision maker (receiver) and an informed agent (sender) who have asymmetric beliefs (“confidence”) on the sender’s ability (“competence”) to observe the state of nature. We find that even when the material payoffs of the players are perfectly aligned, the sender’s over- and underconfidence on his information give rise to information loss in communication, although they do not by themselves completely eliminate information transmission in equilibrium. However, an underconfident sender may prefer no communication to informative communication. We also show that when the sender is biased, overconfidence can lead to more information transmission and welfare improvement. Copyright Springer Science+Business Media New York 2015

Keywords: Overconfidence; Underconfidence; Communication apprehension; Cheap talk; D03; D83 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:theord:v:78:y:2015:i:2:p:233-259

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DOI: 10.1007/s11238-014-9416-5

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