Abstract
This paper models the incentives created by career concerns for opinion-producing agents. We find that career concerns can create an incentive for exaggeration or anti-herding, since high-ability agents will have opinions that are more different from the consensus on average and potential clients will learn more quickly about how different an agent's opinions are from the consensus on average that about whether or not they are exaggerating. The model predicts that agents should exaggerate more when they are under-rated by their clients, when the realizations of the variables they are forecasting are expected to be especially noisy, and when they expect to make fewer future forecasts. We find that these predictions are consistent with the empirical data on equity analyst's earnings forecasts.
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