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Bayesian Persuasion

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  • Emir Kamenica
  • Matthew Gentzkow
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    Abstract

    When is it possible for one person to persuade another to change her action? We consider a symmetric information model where a sender chooses a signal to reveal to a receiver, who then takes a noncontractible action that affects the welfare of both players. We derive necessary and sufficient conditions for the existence of a signal that strictly benefits the sender. We characterize sender-optimal signals. We examine comparative statics with respect to the alignment of the sender's and the receiver's preferences. Finally, we apply our results to persuasion by litigators, lobbyists, and salespeople. (JEL D72, D82, D83, K40, M31)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.6.2590
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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 101 (2011)
    Issue (Month): 6 (October)
    Pages: 2590-2615

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    Handle: RePEc:aea:aecrev:v:101:y:2011:i:6:p:2590-2615

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    References

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    1. Wouter Dessein, 2000. "Authority and Communication in Organizations," Econometric Society World Congress 2000 Contributed Papers 1747, Econometric Society.
    2. Ostrovsky, Michael & Schwarz, Michael, 2007. "Information Disclosure and Unraveling in Matching Markets," Research Papers 1965, Stanford University, Graduate School of Business.
    3. Lewis, Tracy R & Sappington, David E M, 1994. "Supplying Information to Facilitate Price Discrimination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 309-27, May.
    4. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476.
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    Cited by:
    1. Renault, Régis & Anderson, Simon P., 2013. "The Advertising Mix for a Search Good," Economics Papers from University Paris Dauphine 123456789/12407, Paris Dauphine University.
    2. Burkhard Schipper & Hee Yeul Woo, 2014. "Political Awareness, Microtargeting of Voters, and Negative Electoral Campaigning," Working Papers 148, University of California, Davis, Department of Economics.
    3. Kolotilin, Anton & Li, Hao & Li, Wei, 2013. "Optimal limited authority for principal," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2344-2382.
    4. Mehmet Ekmekci & Nenad Kos, 2014. "Value of Information and Fairness Opinions in Takeovers," Working Papers 510, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    5. Midjord, Rune, 2012. "Competitive Pressure and Job Interview Lying: A Game Theoretical Analysis," DFAEII Working Papers 2012-14, University of the Basque Country - Department of Foundations of Economic Analysis II.
    6. Martin Dumav & Maxwell B. Stinchcombe, 2013. "The von Neumann/Morgenstern approach to ambiguity," Working Papers 480, Bielefeld University, Center for Mathematical Economics.
    7. Rick Harbaugh & Eric Rasmusen, 2012. "Coarse Grades: Informing the Public by Withholding Information," Working Papers 2012-06, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    8. Archishman Chakraborty & Rick Harbaugh, 2012. "Persuasive Puffery," Working Papers 2012-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    9. Wataru Tamura, 2012. "A Theory of Multidimensional Information Disclosure," ISER Discussion Paper 0828, Institute of Social and Economic Research, Osaka University.
    10. Olivier Compte & Andrew Postlewaite, 2010. "Simple Auctions, Second Version," PIER Working Paper Archive 13-017, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Apr 2013.
    11. Andrew Caplin & Mark Dean, 2013. "Behavioral Implications of Rational Inattention with Shannon Entropy," NBER Working Papers 19318, National Bureau of Economic Research, Inc.
    12. Irene Valsecchi, 2013. "The expert problem: a survey," Economics of Governance, Springer, vol. 14(4), pages 303-331, November.
    13. Ennio Bilancini & Leonardo Boncinelli, 2014. "Persuasion with Reference Cues and Elaboration Costs," Working Papers - Economics wp2014_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    14. Kremer, Ilan & Mansour, Yishay & Perry, Motty, 2013. "Implementing the "Wisdom of the Crowd"," The Warwick Economics Research Paper Series (TWERPS) 1024, University of Warwick, Department of Economics.
    15. Penélope Hernández & Bernhard von Stengel, 2012. "Nash Codes for Noisy Channels," Discussion Papers in Economic Behaviour 0912, University of Valencia, ERI-CES.
    16. Florian Hoffmann & Roman Inderst & Marco Ottaviani, 2013. "Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning," Working Papers 479, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    17. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
    18. Wataru Tamura, 2013. "Optimal Monetary Policy and Transparency under Informational Friction," CARF F-Series CARF-F-329, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

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