Ли Александр Вень-Чженевич
Optimal Expert Selection in Cheap-talk Games with Reputation Concerns
This paper analyses a communication game between a decision-maker and a reputationally concerned expert. We study how the change in the initial reputation affects the behavior of experts in the presence of a non-revealing action. It is shown that an increase in initial reputation leads to less risk-averse behavior from the side of the experts. We further investigate optimal choices of consulting experts in a competitive setting. We discover that by increasing the number of experts to two, decision-maker can decrease the incentives for both experts to induce non-revealing action, resulting in more truthful reporting. We also derive that in order to maximize the value of expert’s advice the decision-maker should give full credibility to each of the experts’ messages and prioritize messages that induce the desired action.