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409
Reputation and Imperfect Information
- Journal of Economic Theory
, 1982
"... A common observation in the informal literature of economics (and elsewhere) is that in multistage “games, ” players may seek early in the game to acquire a reputation for being “tough ” or “benevolent ” or something else. But this phenomenon is not observed in some formal game-theoretic analyses of ..."
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Cited by 519 (5 self)
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A common observation in the informal literature of economics (and elsewhere) is that in multistage “games, ” players may seek early in the game to acquire a reputation for being “tough ” or “benevolent ” or something else. But this phenomenon is not observed in some formal game-theoretic analyses of finite games, such as Selten’s finitely repeated chain-store game or in the finitely repeated prisoners ’ dilemma. We reexamine Selten’s model, adding to it a “small ” amount of imperfect (or incomplete) information about players ’ payoffs, and we find that this addition is sufficient to give rise to the “reputation effect ” that one intuitively expects. Journal of Economic Literature, Classification Numbers: 026. 2 13, 6 11. 1.
Authority and Communication in Organizations
- Review of Economic Studies
, 2002
"... This paper studies delegation as an alternative to communication. We show that a principal prefers to delegate control to a better informed agent rather than to communicate with this agent as long as the incentive conßict is not too large relative to the principal’s uncertainty about the environment ..."
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Cited by 210 (11 self)
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This paper studies delegation as an alternative to communication. We show that a principal prefers to delegate control to a better informed agent rather than to communicate with this agent as long as the incentive conßict is not too large relative to the principal’s uncertainty about the environment. We further identify cases in which the principal optimally delegates control to an ’intermediary’, and show that keeping a veto-right typically reduces the expected utility of the principal unless the incentive conßict is extreme. JEL ClassiÞcation: D23, D82.
A theory of friendly boards
- Journal of Finance
, 2007
"... We analyze the consequences of the board’s dual role as advisor as well as monitor of management. Given this dual role, the CEO faces a trade-off in disclosing information to the board: If he reveals his information, he receives better advice; however, an informed board will also monitor him more in ..."
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Cited by 198 (8 self)
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We analyze the consequences of the board’s dual role as advisor as well as monitor of management. Given this dual role, the CEO faces a trade-off in disclosing information to the board: If he reveals his information, he receives better advice; however, an informed board will also monitor him more intensively. Since an independent board is a tougher monitor, the CEO may be reluctant to share information with it. Thus, management-friendly boards can be optimal. Using the insights from the model, we analyze the differences between sole and dual board systems. We highlight several policy implications of our analysis. Too much emphasis on monitoring tends to create a rift between non-executive and executive directors, whereas the more traditional job of forming strategy requires close collaboration. In both activities, though, independent directors face the same problem: they depend largely on the chief executive and the company’s management for information. (The Economist [February 10, 2001, p. 68], describing a survey by PriceWater-houseCoopers of British boards.)
Lying for strategic advantage: Rational and boundedly rational misrepresentation of intentions
- Amer. Econ. Rev
, 2003
"... Starting from an example of the Allies ’ decision to feint at Calais and attack Normandy on D-Day, this paper models misrepresentation of intentions to competitors or enemies. Allowing for the possibility of bounded strategic rationality and rational players ’ responses to it yields a sensible accou ..."
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Cited by 111 (7 self)
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Starting from an example of the Allies ’ decision to feint at Calais and attack Normandy on D-Day, this paper models misrepresentation of intentions to competitors or enemies. Allowing for the possibility of bounded strategic rationality and rational players ’ responses to it yields a sensible account of lying via costless, noiseless messages. In some leading cases, the model has generically unique pure-strategy sequential equilibria, in which rational players exploit boundedly rational players, but are not themselves fooled. In others, the model has generically essentially unique mixed-strategy sequential equilibria, in which rational players’ strategies protect all players from exploitation. (JEL C72, D72, D80) Lord, what fools these mortals be! —Puck, A Midsummer Night’s Dream, Act 3 You may fool all the people some of the time; you can even fool some of the people all the time; but you can’t fool all of the people all the time.
The Negotiation and Acquisition of Recursive Grammars as a Result of Competition Among Exemplars
- Linguistic Evolution through Language Acquisition: Formal and Computational Models
, 1999
"... this paper is an investigation of how recursive communication systems can come to be. In particular, the investigation explores the possibility that such a system could emerge among the members of a population as the result of a process I characterize as "negotiation," because each individ ..."
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Cited by 76 (0 self)
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this paper is an investigation of how recursive communication systems can come to be. In particular, the investigation explores the possibility that such a system could emerge among the members of a population as the result of a process I characterize as "negotiation," because each individual both contributes to, and conforms with, the system 1
Using privileged information to manipulate markets: Insiders, gurus, and credibility
- Quarterly Journal of Economics
, 1992
"... Access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted announcements. The fact that privileged information is noisy interferes with the public's attempts to learn whether such announcements are honest; i ..."
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Cited by 72 (0 self)
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Access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted announcements. The fact that privileged information is noisy interferes with the public's attempts to learn whether such announcements are honest; it allows opportunistic individuals to manipulate prices repeatedly, without ever being fully found out. This leads us to extend Sobel's [1985] model of strategic communication to the case of noisy private signals. Our results show that when truthfulness is not easily verifiable, restrictions on trading by insiders may be needed to preserve the integrity of information embodied in prices. I.
A General Equilibrium Model of Statistical Discrimination
- Journal of Economic Theory
, 2002
"... We consider a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated differently in equilibrium due to informational externalities. Unlike earlier models of statistical discrimination, group inequalities may arise even if the corresponding ..."
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Cited by 53 (8 self)
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We consider a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated differently in equilibrium due to informational externalities. Unlike earlier models of statistical discrimination, group inequalities may arise even if the corresponding model with a single group has a unique equilibrium. The dominant group gains from discrimination, rationalizing why a majority may be reluctant to eliminate discrimination. The model is also consistent with "reverse discrimination" as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity.
