SFB 303 Discussion Paper No. A - 137

Author: Lehmann-Waffenschmidt, Marco
Title: Optimal Advising under Delaying Reaction Regimes
Abstract: It is a well-known phenomenon in social reality that decision makers tend to delay the execution of a given advice the more the less urgent the underpinning arguments appear to be. Particularly, this can be observed in economic and in environmental policy. It is the purpose of this study to provide an analytical framework in which a professional adviser`s objectives are analyzed. One of this objectives is to choose such an advice and such underpinning arguments that the advice is really taken. This is related to the problem of the predictability of social events which for the first time has rigorously been analyzed by Grunberg and Modigliani in 1954. Using an intuitive fiberwise set-up the present study only needs an elementary fixed point result to show the existence of accurately taken underpinned advices. Furthermore, the adviser`s other objective of being right with his argument and his potential self-interest in the ultimate outcome are also taken into account by means of a subjective utility function. This approach is in a sense complementary to a recent branch in literature on strategic information transmission and credibility.
Keywords: underpinned advice, delayed reaction function, argument justification, social reputation
Creation-Date: December 1987
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