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Policy Advice with Imperfectly Informed Experts

Published/Copyright: April 22, 2004
The B.E. Journal of Theoretical Economics
From the journal The B.E. Journal of Theoretical Economics Volume 4 Issue 1

We study policy advice by several experts with noisy private information and biased preferences. We highlight a trade-off between the truthfulness of the information revealed by each expert and the number of signals from different experts that can be aggregated to reduce noise. Contrary to models with perfectly informed experts, because of this trade-off, full revelation of information is never possible. However, almost fully efficient information extraction can be obtained in two cases. First, there is an equilibrium in which the outcome converges to the first best benchmark with no asymmetric information as we increase the precision the experts' signals. Second, the inefficiency in communication also converges to zero as the number of experts increases, even when the residual noise in the experts' private signals is large and all the experts have significant and similar (but not necessarily identical) biases.

Keywords: Asymmetric Information; Cheap talk; Experts.
Published Online: 2004-4-22

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

Articles in the same Issue

  1. Advances Article
  2. Policy Advice with Imperfectly Informed Experts
  3. Backward Induction and Model Deterioration
  4. Contributions Article
  5. Search and Bargaining in Large Markets With Homogeneous Traders
  6. To Make or Buy: An Allocation of Attention
  7. A Simple Inducement Scheme to Overcome Adoption Externalities
  8. Optimal Dynamic Portfolio Risk with First-Order and Second-Order Predictability
  9. Uniform Proofs of Order Independence for Various Strategy Elimination Procedures
  10. Players With Limited Memory
  11. Precedents and Timing: A Strategic Analysis of Multi-Plaintiff Litigation
  12. Optimal Auctions with Endogenous Entry
  13. Topics Article
  14. Multiple-Object Auctions Around a Circle
  15. Market Size and Vertical Equilibrium in the Context of Successive Cournot Oligopolies
  16. Trade and Linked Exchange; Price Discrimination Through Transaction Bundling
  17. A Sequential Signaling Model of the Sale of an Invention to an Oligopolist
  18. Vertical Differentiation, Asymmetric Information and Endogenous Bank Screening
  19. Patent Renewal Fees and Self-Funding Patent Offices
  20. Imitation and Long Run Outcomes
  21. Counterfactual Reasoning and Common Knowledge of Rationality in Normal Form Games
  22. Unraveling of Information: Competition and Uncertainty
  23. A Theory of Vague Expected Utility
  24. Sequential Decision-Making and Asymmetric Equilibria: An Application to Takeovers
https://doi.org/10.2202/1534-5963.1100
Keywords for this article
Asymmetric Information; Cheap talk; Experts.

Articles in the same Issue

  1. Advances Article
  2. Policy Advice with Imperfectly Informed Experts
  3. Backward Induction and Model Deterioration
  4. Contributions Article
  5. Search and Bargaining in Large Markets With Homogeneous Traders
  6. To Make or Buy: An Allocation of Attention
  7. A Simple Inducement Scheme to Overcome Adoption Externalities
  8. Optimal Dynamic Portfolio Risk with First-Order and Second-Order Predictability
  9. Uniform Proofs of Order Independence for Various Strategy Elimination Procedures
  10. Players With Limited Memory
  11. Precedents and Timing: A Strategic Analysis of Multi-Plaintiff Litigation
  12. Optimal Auctions with Endogenous Entry
  13. Topics Article
  14. Multiple-Object Auctions Around a Circle
  15. Market Size and Vertical Equilibrium in the Context of Successive Cournot Oligopolies
  16. Trade and Linked Exchange; Price Discrimination Through Transaction Bundling
  17. A Sequential Signaling Model of the Sale of an Invention to an Oligopolist
  18. Vertical Differentiation, Asymmetric Information and Endogenous Bank Screening
  19. Patent Renewal Fees and Self-Funding Patent Offices
  20. Imitation and Long Run Outcomes
  21. Counterfactual Reasoning and Common Knowledge of Rationality in Normal Form Games
  22. Unraveling of Information: Competition and Uncertainty
  23. A Theory of Vague Expected Utility
  24. Sequential Decision-Making and Asymmetric Equilibria: An Application to Takeovers
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