Learning about Analysts
Research output: Working paper › Research
Standard
Learning about Analysts. / Rudiger, Jesper; Vigier, Adrien.
2017.Research output: Working paper › Research
Harvard
APA
Vancouver
Author
Bibtex
}
RIS
TY - UNPB
T1 - Learning about Analysts
AU - Rudiger, Jesper
AU - Vigier, Adrien
PY - 2017
Y1 - 2017
N2 - We examine an analyst with career concerns making cheap talk recommendations to a sequence of traders, each of whom possesses noisy private information concerning the analyst's ability. Each period, the reputation of the analyst is updated based on the recommendation and price developments. An endogeneity problem thus arises, creating opportunities for the bad analyst to manipulate the market. We show that if, by a streak of good luck, the bad analyst builds up her reputation she can then momentarily hide her type. However, the capability of the bad analyst to manipulate the market has limits: in all equilibria the market eventually learns the ability of the analyst. Our results are consistent with several empirical regularities.
AB - We examine an analyst with career concerns making cheap talk recommendations to a sequence of traders, each of whom possesses noisy private information concerning the analyst's ability. Each period, the reputation of the analyst is updated based on the recommendation and price developments. An endogeneity problem thus arises, creating opportunities for the bad analyst to manipulate the market. We show that if, by a streak of good luck, the bad analyst builds up her reputation she can then momentarily hide her type. However, the capability of the bad analyst to manipulate the market has limits: in all equilibria the market eventually learns the ability of the analyst. Our results are consistent with several empirical regularities.
KW - Faculty of Social Sciences
KW - Analysts
KW - Career Concerns
KW - Reputations
KW - Social Learning
M3 - Working paper
T3 - Cowles Foundation Working Paper
BT - Learning about Analysts
ER -
ID: 137619013