When an agent's motivation is sensitive to how his supervisor thinks about the agent's competence, the supervisor has to take into account both informational and expressive contents of her message to the agent. This paper shows that the supervisor can credibly express her trust in the agent's ability only by being unclear about what to do. Suggesting what to do, i.e., "directives," could reveal the supervisor's "distrust" and reduce the agent's equilibrium effort level even though it provides useful information about the decision environment. There is also an equilibrium in which directives are neutral in expressive content. However, it is shown that neologism proofness favors equilibria in which directives are double-edged swords.

This paper investigates how an office-motivated incumbent can use transparency enhancement on public spending to signal his budgetary management ability and win re-election. We show that, when the incumbent faces a popular challenger, transparency policy can be an effective signaling device. It is also shown that electoral pressure can have a nonmonotonic effect on transparency, but a higher electoral pressure always increases the informativeness of signaling and the voter's utility.

© 2016 Elsevier Inc. A seller wants a buyer to choose a good whose value is the seller's private information. The buyer's memory is limited, and she decides whether to remember the good conditional on a signal about the value. The seller then decides whether to send a costless message that can remind the buyer of the good. Since the reminder could convey the seller's private information in equilibrium, whether to send a reminder is a non-trivial question. It is shown that costless messages can be informative in equilibrium in spite of the strong conflict of interest between the players. In any informative equilibrium, silence conveys positive information about the value, whereas the reminder conveys negative information.

© 2015, Springer-Verlag Berlin Heidelberg. Unlike in the standard jury voting experiment, the voting environment in practice has no explicit signal structure. Voters then need to conceptualize the information structure in order to update their beliefs based on 'pivotal reasoning'. This paper investigates whether voters can play a strategic voting under a 'detail-free' environment. We obtain non-parametric predictions in terms of the differences in voting behaviors under majority and unanimity rule. Our experimental results suggest that voters can still play the strategic voting as in the existing experiments.

Agents compete to solve a problem. Each agent simultaneously chooses either a safe method or a risky method to solve the problem. This paper analyzes a prize scheme as an incentive to induce the optimal risk-taking level which maximizes the designer's interest. It is shown that whenever the winner-take-all scheme induces excessive risk-taking, there exists a prize scheme which induces the optimal risk-taking. Moreover, the existence of such a prize scheme is guaranteed if the number of competitors is sufficiently large.

I investigate the complementarity of behavioral biases in a simple invest- ment problem. The agent has incomplete knowledge about the correlation between fitness and the decision environment. Nature endows the agent with a decision pro- cedure so that the induced action can reflect this correlation. I show that the agent with this decision procedure always exhibits (i) present biased time preference, (ii) distorted beliefs, and (iii) cognitive dissonance. The three biases are complements and the absence of one of them destroys the value of the other two. The decision procedure also provides insights into the non-fungibility of savings.