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Welfare and Competition in Expert Advice Markets

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  • Albertazzi, Andrea

    (IMT School for Advanced Studies Lucca)

  • Ploner, Matteo
  • Vaccari, Federico

Abstract

We perform a controlled experiment to study the welfare effects of competition within a strategic communication environment. Two equally informed senders with conflicting interests can misreport information at a cost. We compare a treatment where only one sender communicates to a treatment where both senders privately communicate with a decision-maker, all else equal. Data show that competition fails to improve decision-making and harms senders' welfare. As a result, the overall market welfare is significantly lower under competition. In both treatments, senders reveal less information, and decision-makers obtain less than the most informative equilibria predict. However, they still reveal and get more information compared to other equilibria.

Suggested Citation

  • Albertazzi, Andrea & Ploner, Matteo & Vaccari, Federico, 2021. "Welfare and Competition in Expert Advice Markets," SocArXiv 5j2w8_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:5j2w8_v1
    DOI: 10.31219/osf.io/5j2w8_v1
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