Learning about Analysts

51 Pages Posted: 30 Nov 2013 Last revised: 13 Dec 2018

See all articles by Jesper Rüdiger

Jesper Rüdiger

Charles III University of Madrid - Department of Business Administration

Adrien Vigier

University of Oxford - Department of Economics

Date Written: December 15, 2018

Abstract

We examine an analyst with career concerns making cheap talk recommendations to a sequence of traders, each of whom possesses private information concerning the analyst's ability. The recommendations of the analyst influence asset prices that are then used to evaluate the analyst. An endogeneity problem thus arises. In particular, if the reputation of the analyst is sufficiently high then an incompetent but strategic analyst is able to momentarily hide her type. An equilibrium in which the market eventually learns the analyst type always exists. However, under some conditions, an equilibrium also exists in which the incompetent analyst is able to hide her type forever.

Keywords: Analysts; Career Concerns; Reputations; Social Learning

JEL Classification: D82, D83, D84, G14, G20

Suggested Citation

Rüdiger, Jesper and Vigier, Adrien, Learning about Analysts (December 15, 2018). Available at SSRN: https://ssrn.com/abstract=2361329 or http://dx.doi.org/10.2139/ssrn.2361329

Jesper Rüdiger (Contact Author)

Charles III University of Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Adrien Vigier

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
257
Abstract Views
1,762
Rank
241,544
PlumX Metrics