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Biased Recommendations

Wonsuk Chung and Rick Harbaugh ()
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Wonsuk Chung: Department of Economics, Indiana University

No 2012-02, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: We develop and experimentally test a discrete choice model of an expert who recommends one of multiple actions to a decision maker who might take no action. Consistent with the recent theoretical literature on cheap talk recommendations, we find that recommendations are "persuasive" in that they reduce the chance that the decision maker takes no action, that recommendations for an action the expert benefits more from are "discounted", that lack of "transparency" about expert incentives undermines communication by both biased and unbiased experts, and that experts "pander" to the perceived preferences of the decision maker.

Keywords: cheap talk; discrete choice; deception; persuasion; discounting; transparency; pandering (search for similar items in EconPapers)
JEL-codes: C92 D82 L0 M3 (search for similar items in EconPapers)
Date: 2012-04
New Economics Papers: this item is included in nep-dcm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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