We provide a theoretical framework showing how CSR activities can insure a firm against lost reputation in the face of adverse events. We offer evidence for this linkage through a case study and a multi-year analysis of stock price responses for S&P 500 companies following product recalls. We find that firms with better CSR ratings fare better than those that do not. Furthermore, a firm that is exceptional in both doing good and avoiding harm suffers virtually no reputational damage following events. Using the results of the study, we offer a guide to managers for determining the appropriate amount and mix of CSR to undertake.

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We study a model in which perfectly informed experts offer advice to a decision maker whose actions affect the welfare of all. Experts are biased and thus may wish to pull the decision maker in different directions and to different degrees. When the decision maker consults only a single expert, the expert withholds substantial information from the decision maker. We ask whether this situation is improved by having the decision maker sequentially consult two experts. We first show that there is no perfect Bayesian equilibrium in which full revelation occurs. When both experts are biased in the same direction, it is never beneficial to consult both. In contrast, when experts are biased in opposite directions, it is always beneficial to consult both. Indeed, in this case full revelation may be induced in an extended debate by introducing the possibility of rebuttal. Downloaded from1. Our results in the case of like biases concern monotonic equilibria where the action taken is a monotonic function of the state. While nonmonotonic equilibria exist, we provide sufficient conditions for all equilibria to be monotonic.2. Our results in the case of opposing biases hold generally for all equilibria, not just monotonic equilibria. 749 A MODEL OF EXPERTISE Downloaded from 3. The case where both b 1 , b 2 Ͻ 0 is qualitatively no different from the case where both b 1 , b 2 Ͼ 0. 752 QUARTERLY JOURNAL OF ECONOMICS at California State University, Fresno on July 24, 2015 http://qje.oxfordjournals.org/ Downloaded from 7. Although our analysis in the like bias case is confined to monotonic equilibria, we know of no instance where admitting a nonmonotonic equilibrium reverses the welfare comparisons. 759 A MODEL OF EXPERTISE

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