When Second Opinions Hurt: A Model of Expert Advice under Career Conce rns

Yaozhou Franklin Liu and Amal Sanyal

No 2010-08, Working Papers from University of Sydney, School of Economics

Abstract: We augment the standard career concerns model by introducing (i) an action that blocks the information about the true state of the world and (ii) the possibility that the principal might reverse her initial action after receiving an interim news. In this model, the principal's decisions as well as the expert's message endogenously determine the observability of the states and consequently, the assessment of the expert's ability by the principal. We show that having access to better interim news could reduce the welfare of the principal due to its strategic eff ect on the expert's recommendation. We also discuss the implication of the results for possible delegation of decision making to another person with di fferent preference parameters.

Keywords: Career Concerns; Reputational Cheaptalk; Signaling Game (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-cta
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http://hdl.handle.net/2123/7115

Related works:
Journal Article: When second opinions hurt: A model of expert advice under career concerns (2012)
Working Paper: When second opinions hurt: a model of expert advice under career concerns (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:syd:wpaper:2123/7115

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