Secret Deliberations
53 Pages Posted: 19 Sep 2015
Date Written: September 18, 2015
Abstract
Sequential advice to a decision maker by two experts, if kept secret from the public, outperforms transparent deliberations. Under secrecy, the prior bias together with the bias due to the lead expert's opinion may or may not generate a conformity bias effect. These effects determine if and when the second expert's recommendation alters the decision maker's choice for the better. The biases may reinforce or oppose each other, leading to either full signal revelation or a beneficial (partial) herding by the second expert. For on average high ability experts, the only way a second expert can be effective is through secret deliberations. The analysis shows complex strategic interactions in sequential deliberations, advancing earlier findings on career concerns and cheap talk advice.
Keywords: Expert advice, career concern, cheap talk, market reputation, deliberation, transparency, secrecy, prior bias, lead opinion bias, conformity bias, signal revelation, beneficial herding, type revelation
JEL Classification: D82, D83, D23, C72
Suggested Citation: Suggested Citation