Confidence and Competence in Communication

Kohei Kawamura

Research output: Working paperDiscussion paper

Abstract

This paper studies information transmission between an uninformed decision maker (receiver) and an informed player (sender) who have asymmetric beliefs ("confidence") on the sender’s ability ("competence") to observe the state of nature. We find that even when the material payoffs of are perfectly aligned, the sender’s over- and underconfidence on his information give rise to information loss in communication, although they do not by themselves completely eliminate information transmission in equilibrium. However, an underconfident sender may prefer no communication to informative communication. We also show that when the sender is biased, overconfidence can lead to more information transmission and welfare improvement.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages32
Publication statusPublished - 13 Sep 2013

Publication series

NameESE Discussion Papers
No.222

Keywords

  • D03
  • D83

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