In deciding on the magnitude of a certain action (say, investment), a decision maker relies on the report of an informed and interested expert who can suppress favorable information. The main departure from the related literature is that the decision maker is uncertain as to whether the expert is of a type that wants to minimize the magnitude of the action or to maximize it. The unique equilibrium outcome is fully characterized by a threshold level of favorable information. If the information is more favorable than that threshold level and if the expert is of the type that wants to maximize the magnitude of the action, the information is fully revealed. In all other cases, the expert report less favorable information and the equilibrium inference is that, in expectation, the actual information is just as favorable as the threshold level.
ASJC Scopus subject areas
- Economics and Econometrics