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Anti-herding and strategic consultation

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  • Levy, Gilat

Abstract

In this paper I analyze how careerist decision makers aggregate and use information provided by others. I find that decision makers who are motivated by reputation concerns tend to ‘anti-herding’, i.e., they excessively contradict public information such as the prior or others’ recommendations. I also find that some decision makers may deliberately act unilaterally and not consult advisers although advice is costless. Moreover, advisers to the decision maker may not report their information truthfully. Even if the advisers care only about the outcome, they bias their recommendation since they anticipate inefficient anti-herding behavior by the decision maker.

Suggested Citation

  • Levy, Gilat, 2004. "Anti-herding and strategic consultation," LSE Research Online Documents on Economics 541, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:541
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    References listed on IDEAS

    as
    1. Gilat Levy, 2005. "Careerist Judges," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 275-297, Summer.
    2. Levy, Gilat, 2000. "Strategic consultation in the presence of career concerns," LSE Research Online Documents on Economics 3627, London School of Economics and Political Science, LSE Library.
    3. Marco Ottaviani & Peter Norman Sorensen, 2002. "Professional Advice: The Theory of Reputational Cheap Talk," Discussion Papers 02-05, University of Copenhagen. Department of Economics.
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    13. Prendergast, Canice & Stole, Lars, 1996. "Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1105-1134, December.
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    More about this item

    Keywords

    Reputation; anti-herding. JEL classification codes : D82; D83;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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