Description:
We consider the problem of a decision-maker who seeks for advice from several experts. The experts have reputation concerns which generate incentives to herd on the prior belief about the state of the world. We address the following question: Should the experts be allowed to exchange their information before providing advice ("collective expertise") or not ("independent expertise")? We show that collective expertise is more informative than independent expertise under low prior uncertainty about the state but less informative otherwise. Independent expertise is more likely to be optimal when the decision-maker has a valuable enough safe option with a stateindependent payo⁄. In contrast, collective expertise gains advantage as the number of experts grows