Experts and Their Records

16 Pages Posted: 20 Nov 2013

See all articles by Alexander P. Frankel

Alexander P. Frankel

Chicago Booth

Michael Schwarz

Yahoo! - Yahoo! Research Labs; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2014

Abstract

A market where short‐lived customers interact with long‐lived experts is considered. Experts privately observe which treatment best serves a customer, but are free to choose more or less profitable treatments. Customers only observe records of experts' past actions. If experts are homogeneous there exists an equilibrium where experts always choose the customer's preferred treatment (play truthfully). Experts are incentivized with the promise of future business: new customers tend to choose experts who performed less profitable treatments in the past. If expert payoffs are private information, experts can never always be truthful. But sufficiently patient experts may be truthful almost always.

JEL Classification: C73, D82

Suggested Citation

Frankel, Alexander P. and Schwarz, Michael, Experts and Their Records (January 2014). Economic Inquiry, Vol. 52, Issue 1, pp. 56-71, 2014, Available at SSRN: https://ssrn.com/abstract=2357237 or http://dx.doi.org/10.1111/ecin.12035

Alexander P. Frankel (Contact Author)

Chicago Booth ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Michael Schwarz

Yahoo! - Yahoo! Research Labs ( email )

Sunnyvale, CA 94089

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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