Independent versus Collective Expertise

50 Pages Posted: 11 Jun 2019

See all articles by Emiliano Catonini

Emiliano Catonini

National Research University Higher School of Economics - International College of Economics and Finance

Andrey Kurbatov

INSEAD

Sergey Stepanov

National Research University Higher School of Economics - Faculty of Economics; National Research University Higher School of Economics - International College of Economics and Finance

Date Written: May 25, 2019

Abstract

We consider the problem of a decision-maker who seeks for advice from reputation-concerned experts. The experts have herding incentives when their prior belief about the state of the world is sufficiently strong. We address the following question: Should experts be allowed to exchange their information before providing advice ("collective expertise") or not ("independent expertise")? Allowing for such information exchange modifies the herding incentives in a non-trivial way. The effect is beneficial for the quality of advice when there is low prior uncertainty about the state and detrimental in the opposite case. We also show that independent expertise is more likely to be optimal when the decision-maker has a valuable enough "safe" option with a state-independent payoff. Finally, collective expertise is more likely to be optimal as the number of experts grows.

Keywords: information aggregation, reputation, cheap talk

JEL Classification: D82, D83

Suggested Citation

Catonini, Emiliano and Kurbatov, Andrey and Stepanov, Sergey, Independent versus Collective Expertise (May 25, 2019). Available at SSRN: https://ssrn.com/abstract=3394209 or http://dx.doi.org/10.2139/ssrn.3394209

Emiliano Catonini

National Research University Higher School of Economics - International College of Economics and Finance ( email )

ul. Shabolovka, 26
office 3431
Moscow, 119049
Russia

Andrey Kurbatov

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Sergey Stepanov (Contact Author)

National Research University Higher School of Economics - Faculty of Economics ( email )

Shabolovka 26
Moscow, 119049
Russia

National Research University Higher School of Economics - International College of Economics and Finance ( email )

Pokrovski Bulvar 11, Korpus Zh, Office 715
Moscow, 109028
Russia

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