Reputational Conservatism in Expert Advice

Abstract

We study expert advice with career concerns and continuous private signals. The principal always implements the safe option, and implements the risky option with a probability increasing in the expert's reputation; outcomes, when realized, update reputation. We show a unique cutoff equilibrium and continuity. Under a relative-diagnosticity condition, the experimentation threshold is increasing in reputation ("playing it safe at the top"). Comparative statics are clean, and success-contingent bonuses map one-to-one into experimentation while gatekeeping scales implemented experimentation and learning.