Strategic Transmission of Correlated Information
Abstract We consider a situation in which a decision-maker gathers information from imperfectly informed experts, receiving coarse signals about a uniform state of the world. Private information is (conditionally) correlated across players, and communication is cheap talk. We show that with two expe...
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| Published in | The Economic journal (London) Vol. 130; no. 631; pp. 2175 - 2206 |
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| Main Authors | , , |
| Format | Journal Article |
| Language | English |
| Published |
Oxford University Press
01.10.2020
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| Online Access | Get full text |
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| Summary: | Abstract
We consider a situation in which a decision-maker gathers information from imperfectly informed experts, receiving coarse signals about a uniform state of the world. Private information is (conditionally) correlated across players, and communication is cheap talk. We show that with two experts correlation unambiguously tightens the conditions on preferences for a truth-telling equilibrium. However, with multiple experts the effect of correlation on the incentives to report information truthfully can be non-monotonic: while little and large levels of correlation hinder truth-telling, intermediate levels may discipline experts’ equilibrium behaviour and foster truthful communication. We discuss the implications of our results for the political discussion in the presence of ‘selective exposure' to media, where similarity in preferences comes with higher correlation, and a trade-off between truth-telling incentives and informational content arises. |
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| ISSN: | 0013-0133 1468-0297 |
| DOI: | 10.1093/ej/ueaa039 |