Confidence and competence in communication

Kohei Kawamura

doi:10.1007/s11238-014-9416-5

Confidence and competence in communication

Kohei Kawamura

School of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

This paper studies information transmission between an uninformed decision
maker (receiver) and an informed agent (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 the players 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 language	English
Pages (from-to)	233-259
Journal	Theory and Decision
Volume	78
Issue number	2
Early online date	13 Feb 2014
DOIs	https://doi.org/10.1007/s11238-014-9416-5
Publication status	Published - 1 Feb 2015

Keywords / Materials (for Non-textual outputs)

overconfidence
underconfidence
communication apprehension
cheap talk
D03
D83

Access to Document

10.1007/s11238-014-9416-5

Confidence_and_Competence_Kawamura
© Kawamura, K. (2015). Confidence and competence in communication. Theory and Decision, 78(2), 233-259. 10.1007/s11238-014-9416-5
Accepted author manuscript, 523 KB

1 Discussion paper

Confidence and Competence in Communication
Kawamura, K., 13 Sept 2013, Edinburgh School of Economics Discussion Paper Series, 32 p. (ESE Discussion Papers; no. 222).
Research output: Working paper › Discussion paper

Open Access
File

Cite this

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AB - This paper studies information transmission between an uninformed decisionmaker (receiver) and an informed agent (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 the players are perfectly aligned,the sender’s over- and underconfidence on his information give rise to informationloss in communication, although they do not by themselves completely eliminateinformation transmission in equilibrium. However, an underconfident sender mayprefer no communication to informative communication. We also show that whenthe sender is biased, overconfidence can lead to more information transmission andwelfare improvement.

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KW - communication apprehension

KW - cheap talk

KW - D03

KW - D83

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IS - 2

ER -

Confidence and competence in communication

Abstract

Keywords / Materials (for Non-textual outputs)

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Research output

Confidence and Competence in Communication

Cite this