Response: The Perils of Exaggeration

The perils of snowmobiling.

Snowmobiling is a popular winter sport in Wisconsin, but it can result in serious injury and death. From 1998-2002, 1090 people in Wisconsin were hospitalized due to injuries related to snowmobiling. From 2002 to 2004, 51 snowmobile-related fatalities were reported to the Wisconsin Department of Natural Resources. Multiple risk factors exist for snowmobile injury and death, with alcohol consump...

The Perils of Presidentialism

Analysts, Incentives, and Exaggeration

Sell-side analysts are compensated, at least in part, by brokerage commissions. These commissions create an incentive to bias forecasts to generate trade. Thus, analysts have clear economic incentives to deceive and traders have economic incentives to detect deception. Prior analytical theories of information transmission games starkly predict that there will always be some deception (with trad...

Rational exaggeration and counter-exaggeration in information aggregation games

We study an information aggregation game in which each of a finite collection of “senders” receives a private signal and submits a report to the center, who then makes a decision based on the average of these reports. The integration of three features distinguishes our framework from the related literature: players’ reports are aggregated by a mechanistic averaging rule, their strategy sets are...

The perils of connectivity.