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Signaling Good Faith by Taking Stands
A decision maker (DM), who will take a binary decision, cares about his reputation for being “good,” i.e., wanting to accord his action choice with public evidence, as opposed to being “bad,” i.e., having a fixed partisan agenda regardless of the evidence. While the decision is taken after evidence is realized, the DM has the option to take a “stand” beforehand, i.e., to communicate his intentions via a cheap-talk message. A wide range of equilibria exist and are characterized by how much the good DM reveals about his standards at this initial communication stage. The most informative of these is ex-ante signaling, which sees the DM effectively commit to a contingent plan as a function of the realized evidence. Our main theorem shows that, across all equilibria, ex-ante signaling minimizes the probability that the DM follows his partisan agenda.
Date:
9 May 2025, 14:15
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room G
Speaker:
Daniel Rappoport (University of Chicago Booth School of Business)
Organising department:
Department of Economics
Part of:
Nuffield Economic Theory Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Edward Valenzano
