Letters of Recommendation As Institutionalized Gossip: Tie Strength and the Advocacy-Accuracy Tradeoff in Brokering

Gossip is both common and consequential. People often share reputational information about others in their absence, and this ubiquitous practice powerfully shapes impressions, interactions, and relationships among senders, receivers, and the targets of gossip. This paper addresses two open questions in the gossip literature: When and why do senders share inaccurate information, and to what extent do receivers rely on such information? We conceptualize letters of recommendation (LORs) as institutionalized gossip and study these questions in the context of labor markets, where senders choose how much to advocate for a job candidate and receivers decide whether to hire them. We propose that senders of LORs balance advocacy and accuracy based on the strength of their ties with the target and the receiver. Specifically, we predict that senders prioritize advocacy over accuracy when they are strongly connected to the target and weakly connected to the receiver; yet prioritize accuracy over advocacy when they are weakly connected to the target and strongly connected to the receiver. We report findings from two large experiments wherein we systematically manipulated the sender's tie strength with both the target and the receiver. In Experiment 1, participants made decisions within a novel economic game we devised to capture the accuracy-advocacy tradeoff. In Experiments 2a and 2b, participants assumed the roles of senders and receivers of LORs, respectively. These experiments show that the strength of senders' ties to others shape the (in)accuracy of their communications and that receivers tend to trust the information conveyed to them.