Forecasts as Repeated Cheap Talk from an Expert of Unknown Statistical Bias

Irene Valsecchi
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Irene Valsecchi: University of Milano-Bicocca

No 2023.20, Working Papers from Fondazione Eni Enrico Mattei

Abstract: For two periods an expert E announces his forecast of the state to a decision-maker D who chooses action. They disagree about the precision of the probability assessments. At the end of period 1 the state is observed. In the last period E makes announcements more extreme than his forecasts. Despite countable equilibria, full revelation is never realised. When in period 1 E is interested in reputation only, the initial equilibrium partition is finite; E makes announcements of greater uncertainty with respect to his forecasts. When E is interested in action too, reputational concerns mitigate exaggerated reports.

Keywords: Cheap-talk; expert; statistical bias (search for similar items in EconPapers)
JEL-codes: D81 D84 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-gth and nep-mic
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