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Noisytalk.com: Broadcasting Opinions in a Noisy Environment

Author

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  • Admati, Anat R.

    (Stanford U)

  • Pfleiderer, Paul C.

Abstract

We analyze a model where an altruistic sender, who may or may not be informed, broadcasts one of a finite set of messages to rational receivers. If broadcasting is costless and the sender is rational, there is an informationally efficient equilibrium, but this equilibrium is not necessarily unique nor symmetric. If the sender is overconfident, he tends to exaggerate, and in equilibrium extreme messages are sent more frequently. While overconfidence reduces informativeness in some cases, it may also eliminate less informative equilibria. We also show that overconfidence can improve informativeness when broadcasting is costly.

Suggested Citation

  • Admati, Anat R. & Pfleiderer, Paul C., 2001. "Noisytalk.com: Broadcasting Opinions in a Noisy Environment," Research Papers 1670r, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:1670r
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    File URL: http://gsbapps.stanford.edu/researchpapers/library/RP1670R.pdf
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    References listed on IDEAS

    as
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    • D00 - Microeconomics - - General - - - General

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