Preselection and Expert Advice

Elisabeth Schulte () and Mike Felgenhauer

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We study the effects of preselection on an expert’s incentive to give truthful advice in a decision environment in which certain decisions yield more precise estimates about the expert’s expertise. The introduction of a preselection stage, in which the decision maker can study the case before asking for advice, alters the expert’s perception of the problem. We identify conditions under which preselection occurs in equilibrium. We show that if the expert adjusts his behavior, the option to preselect may reduce the expected utility of the decision maker.

Keywords: Reputation; cheap talk; safe haven (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015
New Economics Papers: this item is included in nep-law, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Preselection and expert advice (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201524

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