Managing Expectations

Abstract

Followers of law, politics and business commonly relate stories of individuals who appear to predict an expected self-performance level below what they believe likely. Candidates, attorneys and firms sometimes seem to under-predict their own capacities. Insofar as individuals typically construct images of high quality, why do they sometimes do the opposite? The standard explanation is that they are trying to hedge against negative consequences of unanticipated failures and take advantage of unexpected successes. Taken to its logical extreme, the argument suggests that individuals should always manage expectations downward. Quite obviously people do not always undersell their abilities. They often accurately evaluate their own capacities. And of course, some people appear to report quality above what they believe to be true. We develop a model of strategic communication designed to explain this variance. The model suggests empirical implications that may be tested across a number of political, legal and business contexts.

Keywords: Campaigns, Judicial Politics, Public Policy, Political Communication, Expectations, Game Theory, Institutions

JEL Classification: C7, C72, D7, D72, D78, D8, D82, D83, D84, K4, K41