A Delegation-Based Theory of Expertise

37 Pages Posted: 15 Aug 2015 Last revised: 5 Apr 2018

See all articles by Attila Ambrus

Attila Ambrus

Duke University - Department of Economics

Volodymyr Baranovskyi

Duke University, Department of Economics, Students

Aaron Kolb

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: February 8, 2018

Abstract

We investigate competition in a delegation framework. An uninformed principal is unable to perform a task herself and must choose between one of two biased and imperfectly informed experts. In equilibrium experts exaggerate their biases, similarly to the winner's curse phenomenon in common value auctions. We show that having a second expert can benefit the principal, even if the two experts have the same biases or if the first expert is known to be unbiased. Our principal can benefit from commitment to randomization and prefers experts with equal rather than opposite biases, in contrast to related work.

Suggested Citation

Ambrus, Attila and Baranovskyi, Volodymyr and Kolb, Aaron, A Delegation-Based Theory of Expertise (February 8, 2018). Economic Research Initiatives at Duke (ERID) Working Paper No. 193. Available at SSRN: https://ssrn.com/abstract=2643672 or http://dx.doi.org/10.2139/ssrn.2643672

Attila Ambrus (Contact Author)

Duke University - Department of Economics ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Volodymyr Baranovskyi

Duke University, Department of Economics, Students ( email )

Durham, NC
United States

Aaron Kolb

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

HOME PAGE: http://https://sites.google.com/site/aaronmkolb/

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