Strategic Transmission of Imperfect Information - Why Revealing Evidence (Without Proof) Is Difficult

Abstract

In our cheap-talk setting, an expert privately observes multiple binary signals, her soft evidence, about a continuous state of the world and then communicates with a decision-maker. While direct transmission of evidence entails communicating details on and potentially revealing each signal, indirect transmission of evidence entails communicating a summary statistics of her evidence. We first establish that fully informative equilibria exist if the conflict of interest is small. Otherwise, direct transmission of evidence is impossible, as neglecting one part of the soft evidence in her communication necessarily induces incentives to manipulate the report on the other part. On the contrary, indirect transmission of evidence remains partially informative for intermediate conflicts of interest. Finally, we introduce the possibility of verification. We show that, if the costs of verification are low, the expert can fully reveal her evidence regardless of the conflict of interest.