The theoretical model explores a real-life situation: When a decision maker assigns an expert to acquire information, it is usually difficult for the decision maker to learn about the expert’s exact ability to obtain information, called expertise, in this paper.
For instance, when patients visit a doctor, they usually do not know how precise the doctor’s diagnosis may be or whether their disease can be detected. Another commonly observed example is when a principal asks an agent to conduct market research, the relative amount of useful information the agent is able to extract is unobservable to the principal. Under these circumstances, the recipient of the information does not know how much information the sender can possess, and communication or cheap talk often occurs before information provision.
Visiting Assistant Professor Run Li from the Department of Finance at the Southern University of Science and Technology (SUSTech) has recently made progress in the study of the cheap talk game in the Microeconomic theory.
The research results were published in Economics Letters, entitled “Full revelation of expertise before disclosure”.
To address the unknown expertise in information disclosure, this theoretical study explores the possibility of transmitting information about expertise through cheap talk before disclosing information. This paper presents a simple model to consider the revelation of expertise by cheap-talk communication in a disclosure game framework.
In this model, a sender wants to persuade a receiver to take a high-value action. The sender has private information about her ability to acquire evidence, known as her expertise. After the sender communicates her expertise through a cheap talk message, she obtains some evidence that she can (partially) disclose or conceal. The receiver wants to take action based on the true information. The study describes the necessary and sufficient condition that guarantees fully informative communication regarding expertise.
Prof. Run Li is the single author of this paper.
Paper Link: https://www.sciencedirect.com/science/article/pii/S0165176522003639
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Proofread ByAdrian Cremin, Yingying XIA