The supply of information by a concerned expert

Andrew Caplin, John Leahy

    Research output: Contribution to journalArticle

    Abstract

    How much information should a policy maker pass on to an ill-informed citizen? In this paper, we address this classic question of Crawford and Sobel (1982) in a setting in which beliefs impact utility, as in Kreps and Porteus (1978). We show that this question cannot be answered using a utility function with standard revealed preference foundations. To solve the model, we go beyond the classical model in two respects, relying on the psychological expected utility model of Caplin and Leahy (2001) to capture preferences, and the psychological game model of Geanakoplos et al (1989) to capture strategic interactions.

    Original languageEnglish (US)
    Pages (from-to)487-505
    Number of pages19
    JournalEconomic Journal
    Volume114
    Issue number497
    DOIs
    StatePublished - Jul 2004

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    Psychological
    Politicians
    Expected utility
    Revealed preference
    Utility function
    Strategic interaction

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    The supply of information by a concerned expert. / Caplin, Andrew; Leahy, John.

    In: Economic Journal, Vol. 114, No. 497, 07.2004, p. 487-505.

    Research output: Contribution to journalArticle

    Caplin, Andrew ; Leahy, John. / The supply of information by a concerned expert. In: Economic Journal. 2004 ; Vol. 114, No. 497. pp. 487-505.
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