Less Informative Advice, More Informative Prices - Paid Promotion and Trading by Financial Influencers
Oct 22, 2026
Less informative strategic advice can produce more informative prices. We study a finfluencer who reports on an asset’s value, trades on his private information, and receives promotional pay linked to the post-report price. With the quality of private information fixed, stronger promotion at high reputation can make strategic advice uninformative yet improve price informativeness across equilibria. Prices can be most informative precisely when the strategic finfluencer always reports favorably. Reputation can also become a liability: with promotional pay, a higher reputation can induce manipulation that leaves both prices less informative and the finfluencer worse off.