Consulting experts with vested interests: The power of benchmarking

Lars Frisell ()

Economics of Governance, 2005, vol. 6, issue 2, 113-123

Abstract: A decisionmaker gets independent advice from two experts, who can be of two different types. Experts are risk-neutral and prefer certain policies irrespective of the state of nature, so to induce information-sharing the decisionmaker must reward truthful experts. I show that, in this environment, a heterogeneous committee has no informational advantage over a single expert: a decision rule that encourages one expert to be honest immediately makes honesty less attractive for the other. With a homogenous committee, the higher is the correlation between the experts’ signals, the more the decisionmaker is willing to pay to secure independent advice. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Strategic advice; heterogeneous vs. homogenous committees; benchmarking; imperfect information; informational efficiency (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10101-005-0105-2

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