Robust Trust

Piotr Dworczak and Alex Smolin

No 21148, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: An agent chooses an action using her private information combined with recommendations from an informed but potentially misaligned adviser. With a known alignment probability, the adviser reports his signal truthfully; with remaining probability, the adviser can send an arbitrary message. We characterize the decision rule that maximizes the agent's worst-case expected payoff. Every optimal rule admits a trust region representation in belief space: advice is taken at face value when it induces a posterior within the trust region; otherwise, the agent acts as if the posterior were on the trust region's boundary. We derive thresholds on the alignment probability above which the adviser's presence strictly benefits the agent and fully characterize the solution in binary-state as well as binary-action environments.

JEL-codes: D81 D82 D83 (search for similar items in EconPapers)
Date: 2026-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP21148 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:21148

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP21148

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().