Confidence and Competence in Communication

Kohei Kawamura ()

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper studies information transmission between an uninformed decision maker (receiver) and an informed player (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 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.

JEL-codes: D03 D83 (search for similar items in EconPapers)
Pages: 32
Date: 2013-07
New Economics Papers: this item is included in nep-cta and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:222

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