Dynamic Delegation with Reputation Feedback

Georgy Lukyanov and Anna Vlasova

No 25-1677, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study dynamic delegation with reputation feedback: a long-lived expert advises a sequence of implementers whose effort responds to current reputation, altering outcome informativeness and belief updates. We solve for a recursive, belief-based equilibrium and show that advice is a reputation-dependent cutoff in the expert’s signal. A diagnosticity condition—failures at least as informative as successes—implies reputational conservatism: the cutoff (weakly) rises with reputation. Comparative statics are transparent: greater private precision or a higher good-state prior lowers the cutoff, whereas patience (value curvature) raises it. Reputation is a submartingale under competent types and a supermartingale under less competent types; we separate boundary hitting into learning (news generated infinitely often) versus no-news absorption. A success-contingent bonus implements any target experimentation rate with a plug-in calibration in a Gaussian benchmark. The framework yields testable predictions and a measurement map for surgery (operate vs. conservative care).

Keywords: Dynamic delegation; expert advice; moral hazard; experimentation; reputational conservatism. (search for similar items in EconPapers)
JEL-codes: C73 D82 D83 (search for similar items in EconPapers)
Date: 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:131008

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