AØKK08327U Seminar: Information Transmission in Economics IS CANCELED

Volume 2014/2015
Education
M.Sc, of Economics
(Only available for Master students at Department of Economics)
Content

The topic of the seminar is models of communication in game theory, especially models of ‘cheap talk’ (i.e. where communication is costless). The focus is on developing theoretical models to deal with cheap talk problems, and on using these to analyze policy questions. For instance, how cheap talk can be used to analyze problems such as financial experts who have reputational concerns, and media outlets who try to maximize their number of readers/viewers.

The aim of the course is that you develop a simple model of your own to describe an empirical phenomenon (if you prefer a purely theoretical project, this is also possible, but you should discuss this with me).

Learning Outcome

There will be a short taught module aimed at (i) understanding the canonical information transmission model of Crawford and Sobel (1982), (ii) understanding how communication bias arises endogenously in situations where players have reputational concerns or where there are restrictions to communication that make it impossible for people to communicate all their information, thus forcing them ‘to take a stance’.

Topics for the project could, for instance, be cheap talk, almost cheap talk, refinements, reputational cheap talk, financial experts, media bias. And address the following questions:

  • how financial experts have incentives to bias their predictions toward (a) the prior beliefs of the market, causing them to be conservative, and (b)  the predictions of other analysts, causing them to ‘herd’,
  • how the market might evaluate expert ability, using only their recommendations and market outcomes
  • how media bias arises endogenously when media outlets try to cater for readers with different prior, beliefs, and how this mechanism perpetuates the polarization of opinions.

A preliminary reading list is:

  • Benabou and Laroque. “Using privileged information to manipulate markets: Insiders, gurus, and credibility”. The Quarterly Journal of Economics, 107(3): p. 921–958, 1992.
  • Cai and Wang. “Overcommunication in strategic information transmission games”. Games and Economic Behavior, 56(1): p. 7 – 36, 2006.
  • Crawford. “A survey of experiments on communication via cheap talk”. Journal of Economic Theory 78(2): p. 286-298, 1998.
  • Crawford and Sobel. “Strategic Information Transmission”. Econometrica 50(6), p. 1431-1451, 1982.
  • Dessein. “Authority and communication in organizations”. Review of Economic Studies, 69(4): p. 811–838, 2002.
  • Farrell and Rabin. “Cheap Talk”. Journal of Economic Perspectives 10(3), p. 103-118, 1996.
  • Gentzkow and Shapiro. “Competition and truth in the market for news”. The Journal of Economic Perspectives, p. 133–154, 2008.
  • Morgan and Stocken. “An Analysis of Stock Recommendations”. RAND Journal of Economics 34(1), p. 183-203.
  • Ottaviani and Sørensen. The Strategy of Professional Forecasting. Journal of Financial Economics 81 (2), p. 441–466, 2006c.
  • Rudiger. “Cross-checking the Media”. Mimeo. 2013.
  • Stein. “Cheap Talk and the Fed: A Theory of Imprecise Policy Announcements”.  American Economic Review 79(1), p. 32-42, 1989.
B.Sc. of Economics
Micro C and nice to have: Game Theory (master level)
Planning meeting ind the begining of the semester,informed by the teacher, writing seminar paper during the semester and presentations at the end of the semester. More informations will be uploaded at Absalon by the teacher.

First meeting: Thursday 19 February 2015
There will be one or two short sessions on the two succeeding Thursdays.

Pre-submission workshop: Thursday 7 May 2015. To present the work and get comments before the final paper is due.

Deadlines:
Choice of topic: 1 April 2015 (preferably before)
Final paper submission: 1 June 2015
  • Category
  • Hours
  • Exam
  • 0,3
  • Seminar
  • 0
  • Total
  • 0,3
Credit
7,5 ECTS
Type of assessment
Written assignment
Oral examination, 20 min under invigilation
A written seminar paper and a oral presentation for the others participans at the seminar.
Exam registration requirements
Attendance on the seminar. The mandatory commitment paper and seminar paper have been handed in at deadline.
Aid

Al aids for the written seminarpaper.

For the oral presentation the slices for the presentation. The teacher can specifiy what els is allowed.

Marking scale
7-point grading scale
Censorship form
External censorship
up to 20 % censorship at the seminarpaper
Exam period
Is decided and informed by the teacher at the compulsive planningmeeting.
Re-exam
As ordinary.
Criteria for exam assesment

The student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.