Timing of Predictions in Dynamic Cheap Talk: Experts vs. Quacks

Abstract

The paper studies a dynamic communication game in the presence of adverse selection and career concerns. A forecaster of privately known competence, who cares about his reputation, chooses the timing of the forecast regarding the outcome of some future event. We find that in all equilibria in a sufficiently general class earlier reports are more credible. Further, any report hurts the forecaster's reputation in the short run, with later reports incurring larger penalties. The reputation of a silent forecaster, on the other hand, gradually improves over time.

Only Time Will Tell: Credible Dynamic Signaling

“…5 Some examples include Vincent [1990], Deneckere and Liang [2006], Daley and Green [2012], Lee and Liu [2013], Dilmé and Li [2016], Dilmé [2017], Kaya and Kim [2018] in bargaining and bilateral trade; Strebulaev, Zhu, and Zryumov [2016] in corporate finance; Vettas [1997], Aköz, Arbatli, and Çelik [2017], Gryglewicz and Kolb [2019], Smirnov and Starkov [2020] in industrial organization/marketing; Smirnov and Starkov [2019] in cheap talk; De Angelis, Ekström, and Glover [2018] in Dynkin games.…”