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How Sharing Information Can Garble Experts’ Advice

Elliott, Matthew and Golub, Benjamin and Kirilenko, Andrei (2014) How Sharing Information Can Garble Experts’ Advice. American Economic Review, 104 (5). pp. 463-468. ISSN 0002-8282. doi:10.1257/aer.104.5.463.

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We model the strategic provision of advice in environments where a principal's optimal action depends on an unobserved, binary state of interest. Experts receive signals about the state and each recommends an action. The principal and all experts dislike making errors in their decision and recommendations, respectively, but may have different costs of different errors. Is it in the principal's interest to let experts share information? Although sharing improves experts' ability to avoid errors, we identify a simple environment in which any principal, regardless of how he trades off the different errors, is worse off if he permits information sharing.

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Additional Information:© 2014 American Economic Association. We thank Jeremy Bulow, Matthew O. Jackson, Paul Milgrom, and Michael Ostrovsky for helpful discussions. We are also grateful to Heski Bar-Isaac, Alex Frankel, and Ben Olken for their suggestions.
Issue or Number:5
Classification Code:JEL Classifications: D82, D83
Record Number:CaltechAUTHORS:20140818-113354575
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Official Citation:Elliott, Matthew, Benjamin Golub, and Andrei Kirilenko. 2014. "How Sharing Information Can Garble Experts' Advice." American Economic Review, 104(5): 463-68. DOI: 10.1257/aer.104.5.463
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:48655
Deposited By: Ruth Sustaita
Deposited On:19 Aug 2014 21:29
Last Modified:10 Nov 2021 18:33

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